Oracle smartphone app in user's hands
AI-powered opportunities will seed exciting future growth / Image source: Adobe
  • New AI-powered contracts see stock leap overnight
  • New deals struck with Microsoft/OpenAI and Alphabet
  • News lifts mood despite mild miss on Q4 earnings/revenues

If you can put up a convincing story that AI-powered opportunities will seed exciting future growth investors seem willing to forgive even when near-term earnings turn sour. That seems to be the case for Oracle (ORCL:NASDAQ), which jumped 9% overnight even as its fiscal fourth-quarter results fell short of Wall Street estimates.

That implies a new all-time peak for Oracle shares of $134.50.

Oracle said on Tuesday (11 Jun) it had struck two new AI partnerships that will leverage the data giant’s AI infrastructure, one with ChatGPT developer Open AI and its backer Microsoft (MSFT:NASDAQ), the other with Alphabet’s (GOOG:NASDAQ) Google Cloud.

Teaming up with Microsoft and OpenAl will help extend the former’s Azure Al platform and provide extra capacity for OpenAl. It is a similar deal with Google Cloud, where the pair will integrate their powerful cloud computing capabilities inside Google Cloud, including the building of a dozen new datacentres.

‘We expect the Oracle database to be available within the Google Cloud in September this year’, Oracle said.


So, what of the quarterly miss? In truth, it was a mild one, with Q4 adjusted EPS (earnings per share) coming in at $1.63 on revenue of $14.3 billion, versus Wall Street consensus pitched at $1.65 on revenue of $14.6 billion.

Remaining performance obligations, a gauge of booked revenue, climbed 44% to $98 billion, which would have helped lift the mood, with Oracle recognising more cloud revenue than licence support for the second consecutive quarter, according to Megabuyte’s Jack Wilson-Fowler.

‘This is being aided by rising demand for training AI LLMs (large language models) in the Oracle Cloud, with the group signing over 30 AI-related contracts in Q4 alone, totalling more than $12.5 billion’, said Wilson-Fowler.

This has fed into a bullish outlook from management, ‘with its double-digit growth guidance for full year 2025 coming in ahead of the market’s expectations for high-single-digit growth.’

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Issue Date: 12 Jun 2024