One of the more amusing things I’ve seen in recent years – and there have been many – was Oracle’s (ORCL) forecast for $104 billion in revenue in FY29 at a meeting for financial analysts on Thursday. Let me put that in context. ORCL’s FY29 ends on May 31, 2029 – nearly five years from now. In the just completed FY24, ORCL had $53 billion in revenue. To get to $104 billion in five years, ORCL needs to compound growth at 14.5% a year over the next five years. That is a significant increase from the single digit growth it has been generating for a long time now. While I’m a believer in ORCL’s story, this forecast is clearly “aspirational” as D.A. Davidson & Co. analyst Gil Luria aptly put it. Economic visibility five years out isn’t great without a cystal ball. ORCL’s shares surged higher at the open Friday but melted down over the rest of the day to finish essentially flat in what looks like a blowoff top.
Meanwhile the broader indexes are surging in anticipation of a 50 point rate cut by the Fed next Wednesday. The odds between 25 and 50 and are now 50/50. If I was a betting man – and I am – I’d bet that they do in fact go 50 causing the S&P to surge to new all time highs – pulling everybody in – before melting down similar to how ORCL did Friday. While I’m all for positive thinking, when taken too far it becomes delusional.