TLDR
- Oracle stock jumped 36% Wednesday, marking its biggest single-day gain since December 1992
- Remaining performance obligations (RPO) surged 360% to $455 billion, driven by four multibillion-dollar contracts
- Oracle Cloud Infrastructure projected to grow 77% this fiscal year and reach $144 billion by 2030
- Larry Ellison’s wealth surpassed Elon Musk’s, making him the world’s richest person
- Company raised capital expenditure forecast to $35 billion from $25 billion to meet AI demand
Oracle stock exploded higher Wednesday following quarterly results that stunned Wall Street analysts. The database giant’s shares gained over 36%, adding more than $250 billion in market value.
The massive rally came despite Oracle missing earnings and revenue expectations for its first quarter. The company reported $1.47 per share versus the expected $1.48.
Oracle’s remaining performance obligations reached $455 billion. This measure of future contracted revenue jumped 360% from the prior year quarter.
Deutsche Bank analyst Brad Zelnick called the results “truly awesome.” The backlog demonstrates Oracle’s growing role in the AI infrastructure market.
Major Contract Wins Drive Growth
CEO Safra Catz revealed Oracle signed four multibillion-dollar contracts during the quarter. Three different customers signed these massive deals.
The client roster includes OpenAI, xAI, Meta, Nvidia, AMD and other leading AI companies. The Wall Street Journal reported Oracle signed a $300 billion five-year agreement with OpenAI.
Oracle projects its Cloud Infrastructure business will grow 77% this fiscal year. The company expects this division to reach $18 billion in annual revenue.
Looking further ahead, Oracle forecasts the business hitting $144 billion by fiscal 2030. This represents exponential growth from current levels.
The company raised its capital expenditure outlook to $35 billion. This increase from the previous $25 billion estimate will fund data center expansion.
AI Boom Validates Oracle Strategy
Oracle’s neutral positioning in AI infrastructure sets it apart from competitors. Unlike Microsoft or Amazon, Oracle doesn’t develop competing AI models.
This neutral status attracts clients looking for alternatives to Big Tech providers. Meta and Elon Musk’s xAI chose Oracle for their AI infrastructure needs.
William Blair analyst Sebastien Naji described Oracle’s backlog as “astonishing.” The results support growing optimism about AI demand.
The stock surge lifted AI chip makers as well. Nvidia gained 4% while AMD rose 3.5% Wednesday.
Oracle’s gains helped push the S&P 500 and Nasdaq to record highs. The results validated the ongoing AI-driven tech rally.
JPMorgan analyst Mark Murphy raised his price target to $270 from $210. However, he questioned Oracle’s customer concentration risk.
Bank of America upgraded Oracle to Buy from Neutral. Analyst Brad Sills noted profitability questions remain for the AI cloud business.
Oracle stock gained 97% year-to-date through Wednesday’s close. The company’s market capitalization exceeded $920 billion following the rally.
Shares rose another 1% in premarket trading Thursday. The stock closed Wednesday at $328.33, up $86.82 from Tuesday’s close.
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