Here’s Why Oracle Corporation (ORCL) Fell in Q1

Soumya Eswaran

Mon, May 19, 2025, 9:32 AM 3 min read

Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” first quarter 20245 investor letter. A copy of the letter can be downloaded here. 2025 started following the best two-year stretch ever for the Russell 1000 Growth Index, with a return of +90% largely driven by the AI infrastructure narrative. The Trump victory and pro-business agenda boosted optimism, leading to a 7% rally. However, the first wave of Trump tariffs disrupted the global order, causing uncertainty to spike to levels comparable to COVID-19. The Russell 1000 Index concentration, which had previously been a tailwind to Index returns, was now weighing down. In the first quarter, the strategy returned -6.07% (gross) and -6.25% (net) compared to -9.97% for the Russell 1000 Growth Index and -4.27% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Polen Focus Growth Strategy highlighted stocks such as Oracle Corporation (NYSE:ORCL). Oracle Corporation (NYSE:ORCL) offers products and services that address enterprise information technology environments. The one-month return of Oracle Corporation (NYSE:ORCL) was 30.67%, and its shares gained 29.95% of their value over the last 52 weeks. On May 16, 2025, Oracle Corporation (NYSE:ORCL) stock closed at $160.49 per share with a market capitalization of $450.051 billion.

Polen Focus Growth Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q1 2025 investor letter:

"The bloom was off the AI rose in the first quarter, which helped our relative performance as companies like NVIDIA and other semiconductor firms saw significant share price weakness. That weakness, however, also translated to Oracle, which we hold. We find the market’s view on Oracle Corporation (NYSE:ORCL) as Gen AI-driven to be somewhat misplaced, as AI represents a tiny percentage of its growth. Our investment case is driven more by its cloud service business and a more traditional shift of its database and applications business to the cloud."

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Oracle Corporation (NYSE:ORCL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 105 hedge fund portfolios held Oracle Corporation (NYSE:ORCL) at the end of the fourth quarter compared to 91 in the third quarter. While we acknowledge the potential of Oracle Corporation (NYSE:ORCL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.