Finance
Big news for Oracle Stock investors
Oracle (NYSE: ORCL) is not the largest provider of cloud services out there, but it is one of the fastest growing at the moment. The company, once best known for its database management, is fully committed to developing its cloud presence and serving artificial intelligence (AI). customers. The efforts are working: demand and revenues from cloud infrastructure have skyrocketed recently.
In fact, in Oracle’s quarterly report this week, the company announced a 42% increase in cloud infrastructure revenue to $2 billion. And Oracle is even predicting double-digit full-year revenue growth based on current AI demand. The company shows that it is attracting customers (it has even signed its largest contracts ever in the past two quarters) and can compete with larger cloud service providers. Additionally, Oracle shared news that could be huge for the company and for shareholders. Let’s check it out.
Oracle’s focus on cloud infrastructure
As mentioned, Oracle focuses on expanding and strengthening its business cloud infrastructure offering and serving AI customers. This helped the company sign its largest-ever sales contracts last quarter from customers looking to train large language models. During the quarter, Oracle signed approximately 30 AI contracts worth more than $12 billion.
This demand drives up Oracle’s remaining performance obligation (RPO), or expected revenue from contracted services. In the quarter, RPO increased 44% to $98 billion. And the company says this momentum should continue, giving us reason to be optimistic about revenue in the coming quarters.
Now let’s move on to the big news that should boost our optimism. Oracle announced two major AI deals involving market giants, a sign that Oracle has joined today’s ranks leading AI companies. OpenAI, the developer of the popular chatbot ChatGPT, will run deep learning and AI workloads on Oracle Cloud infrastructure. And Alphabet‘s Google has signed a multi-cloud partnership with Oracle, making it easy for customers to deploy projects across both clouds. As part of the deal, Oracle will offer ‘Oracle Database at Google Cloud’ starting in September.
These two agreements in particular should help Oracle differentiate itself and gain market share in the fast-growing field of AI. The company’s progress in winning contracts has been promising, and these deals could add to that momentum.
A leader in multi-cloud partnerships
Oracle may be a smaller cloud player than competitors, but the company offers benefits that are recognized. The Google deal represents a new multi-cloud partnership, following a previous agreement with Google Microsoft, and these agreements offer customers flexibility – a big plus. And the flexibility doesn’t stop there. Oracle also offers other solutions, such as sovereign cloud and even Oracle Alloy, that allow customers to run their own Oracle-based cloud. Oracle is also known for its competitive pricing, which is generally lower than its competitors, another positive for winning contracts.
So in addition to Oracle’s benefits and the revenue gains its cloud business has seen recently, these deals with OpenAI and Alphabet represent even more good news for the company and its investors. This translated into a more than 13% rise for the stock in one trading session after Oracle announced the agreements – and the shares hit an all-time high.
Of course, this is just a short-term stock move, but that doesn’t come out of the blue: Oracle stock has already gained momentum, rising 20% in the past year. And if Oracle continues to generate revenue growth, expand its capacity and partner with other major cloud providers, its stock could continue to gain.
Is it too late to jump into Oracle AI’s growth story? Not at all. The stock trades for just 22 times forward earnings estimates, an absolute steal considering all the points I made above. So now you can buy this tech player at a bargain and cheer on the huge news that Oracle recently delivered – news that could rival its long-term earnings and stock price growth.
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Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Oracle. The Motley Fool holds positions in and recommends Alphabet, Microsoft and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has one disclosure policy.
Big news for Oracle Stock investors was originally published by The Motley Fool
