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Oracle Stock Soars 10% on AI Demand, New Deals with Google and OpenAI
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Oracle Stock Soars 10% on AI Demand, New Deals with Google and OpenAI
Oracle shares soared by over 10% on Wednesday, following the announcement of its fourth-quarter results, highlighting strong future revenue expectations and significant new deals with Google and OpenAI.
Key Financial Results
Revenue: Oracle reported $14.29 billion in revenue for the quarter, a 3% increase year-over-year, although slightly below analysts' expectations of $14.55 billion.
Earnings: Adjusted earnings per share were $1.63, compared to the anticipated $1.65.
Strong RPO Backlog
Oracle reported a substantial $98 billion in remaining performance obligations (RPO), indicating the revenue it expects from future contracts. CEO Safra Catz attributed this primarily to the growing demand for Oracle's cloud services to train AI models.
Major New Deals
OpenAI Partnership: Oracle announced a partnership with OpenAI to provide additional computing capacity.
Google Cloud Integration: Oracle is integrating its database services with Google Cloud, enhancing its cloud capabilities.
Analysts' Perspectives
Citi: Analysts from Citi noted the slow revenue growth but emphasized the "tremendous RPO bookings growth," making it hard to ignore the substantial backlog.
UBS: UBS analysts highlighted the "extraordinary sequential backlog growth of $18 billion" and reiterated their buy rating on Oracle stock, emphasizing the strong AI narrative driving positive sentiment.
Morgan Stanley: Despite noting mixed results, Morgan Stanley analysts recognized the "near term AI build-out" as a significant positive, placing Oracle in a favorable position within the AI infrastructure market.