Martin Gamble on US markets: Oracle shines as data storage surge continues

US markets continued to be volatile this week, buffeted by continued tensions in the Middle East and rising oil prices.

Concerns that the conflict will last longer than expected have put upward pressure on US 10-year government bond yields which moved back above 4.2%, their highest level since mid-January.

Consumer prices remained stable in February at 2.4% year-on-year, but investors are braced for inflation to reaccelerate as higher oil and commodity prices reverberate through the economy.

Shares in fertiliser makers Dow Chemical, CF Industries, and Mosaic climbed by double digits in response to the conflict in Iran on disruption concerns.

Flash memory chip makers SanDisk, Micron and Western Digital were also strong gainers, as AI-driven demand continued to support positive sentiment towards the space.

Oracle

Enterprise software giant Oracle saw its shares increase 9% on 10 March after third-quarter earnings beat analysts’ estimates and the company raised its outlook.

The shares have dropped by more than a third over the last three months on concerns over Oracle’s $50 billion debt and equity funding plans and uncertainty over an announced $300 billion five-year computing deal with OpenAI.

There was relief that Oracle didn’t raise its 2026 capital expenditure plans from the $50 billion previous guided for, unlike other hyperscalers which have projected a collective spend of up to $640 billion in 2026, up from $388 billion.

Investors were buoyed by Oracle’s comments on AI potential efficiency benefits: “AI code generation is making our SaaS (software-as a-service) application suites more competitive and more profitable,” the company said in a statement.

Worries over AI tools disrupting software and legal services led to a big sell-off in early February.

Looking ahead Oracle projected raised its fiscal 2027 revenue projection to $90 billion, which was comfortably ahead of analysts’ estimates of $86.5 billion.  

Adobe

Creative software firm Adobe saw its shares fall as much as 8% after announcing long-time CEO Shantanu Narayen will be leaving once a successor has been appointed.  

That he is leaving after 18-years is not as much a surprise as the fact he is doing so without a named successor at a critical time for the software maker, which is navigating AI challenges.  

The shares were caught up in the broad software sector sell off in February sparked by worries about the impact of artificial intelligence, leaving them down nearly 30% over the last year.

Adobe revealed first quarter revenues up 12% to a record $6.4 billion, ahead of analysts’ estimates and adjusted earnings per share of $6.06, also above consensus forecasts of $5.88.

Narayen commented: “Adobe delivered record Q1 results with AI-first annual recuring revenues more than tripling year over year and subscription revenue growing 13 percent.”

The company projected second quarter earnings per share in the range of $5.80 to $5.85 and revenues of $6.45 billion in the middle of the forecast range.

Dollar General

Discount retailer Dollar General reported better than expected fourth quarter sales and profit on 12 March, as bargain-hunters drove same-store sales up 4.3% compared to analysts’ estimates of 3.4%.

With the shares up close to 40% over the last six months heading into the numbers, expectations were running high, which explains the muted investor reaction with the shares falling 7%.

There was also disappointment around the company’s forward guidance which projected 2027 diluted EPS in a range of $7.1 to $7.35, which fell slightly short of the consensus estimate of $7.25.

Revenue for the three months to the end of January was up 6% to $10.9 billion compared with the consensus estimate of $10.7 while earnings per share of $1.93 comfortably topped the $1.61 estimate.

CEO Todd Vasos said: “Continued advancement of our key initiatives contributed to strong operating margin expansion and EPS growth that well exceeded our expectations.”

Dollar General reiterated long term targets which include same-store sales growth of 2% to 3% and diluted earnings per share growth of at least 10%.