04 Jun An options strategy to maximize gains and minimize risk in this cloud AI winner
Oracle (ORCL) is undergoing a resurgence fueled by its leadership in artificial intelligence services and robust growth in Oracle Cloud Infrastructure (OCI). With OCI emerging as a preferred platform for AI workloads, Oracle has secured major partnerships like the $500 billion Stargate project with OpenAI and SoftBank, positioning it as a key player in the AI revolution. ORCL’s attractive valuation, strong profitability and recent breakout signal suggests significant upside potential — making it a compelling candidate for bullish exposure in a market recovery. Trade timing The timing for adding bullish exposure to ORCL is optimal, as the stock recently broke above its $155 resistance and bounced higher as it retested it as support. This breakout is coupled with outperformance relative to the S & P 500 with an upside target of $190, offering an attractive risk-to-reward profile for a long position. Fundamentals ORCL trades at a meaningful discount to its industry despite superior profitability and growth metrics, positioning it as an undervalued tech name with significant upside potential. Forward PE ratio: 24.5x vs. industry average 27.7x Expected EPS growth: 13% vs. industry average 11% Expected revenue growth: 13% vs. industry average 9% Net margins: 21.8% vs. industry average 9.8% Bullish thesis AI-driven resurgence : Oracle’s OCI revenue grew 49% YoY to $2.7 billion in Q3 FY2025, driven by demand for AI workloads signaling a strong pipeline for AI and cloud contracts. Strategic AI partnerships : Oracle’s role in the $500 billion Stargate project with OpenAI and SoftBank, alongside deploying over 131,000 Nvidia Blackwell GPUs, cements its position as a key player in AI infrastructure. Attractive valuation : ORCL trades at 24x forward earnings, below the Nasdaq-100’s 27.5x, with projected revenue growth of 13% in FY2026 and 18% in FY2027, highlighting significant upside potential. Technical breakout : The breakout above $155, with an upside target of $190, confirms strong momentum and potential for further gains as investor confidence grows. The trade To capitalize on ORCL’s potential upside, I’m buying an Aug. 15 $170/$190 Call Vertical @ $7.12 Debit. This entails: Buying the Aug $170 Call @ $11.15 Selling the Aug $190 Call @ $4.03 The maximum reward is $1,288 if ORCL is above $190 at expiration. The maximum risk is $712 if ORCL is below $170 at expiration. The breakeven point for this trade is $177.12. View this trade with updated prices at OptionsPlay. This strategy positions you to benefit from ORCL’s potential rally, leveraging its technical breakout, AI-driven growth and undervaluation to profit from a high-quality tech name with defined risk. With Oracle’s leadership in AI-related cloud services, this call vertical offers a compelling opportunity to capture upside potential in a thriving industry. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.