Oracle shares jump on US$500 billion cloud revenue prospects

Oracle shares soared about 29 per cent before the bell on Wednesday after the enterprise software company forecast booked revenue from its core cloud business to exceed half a trillion dollars over the next few months.

If the gains hold, the company will add US$208 billion to its market capital with shares at $312.65, taking the total valuation to $878.2 billion.

The shares have risen 45 per cent so far this year, with investors betting big on AI-driven cloud firms.

Oracle’s competitors are seeing rapid cloud growth as well, reflecting how rising enterprise demand for AI infrastructure is fueling a broader lift across the industry.

The results lifted shares of several U.S. chipmakers in premarket trading, with AMD up 3.2 per cent, Nvidia NVDA.O 1.96 per cent, and Broadcom 2.28 per cent.

Oracle said on Tuesday it had signed four multi-billion-dollar contracts with three different customers in the first quarter, signaling booming demand for its relatively low-cost cloud infrastructure services.

“Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars,” said CEO Safra Catz.

The company forecast Oracle Cloud Infrastructure (OCI) revenue growth of 77 per cent to $18 billion this fiscal year, and about $144 billion over the subsequent four years.

“Oracle’s relationship with esteemed artificial intelligence firms, such as OpenAI, as well as its participation in Stargate, puts it center stage for AI training and inference workloads,” Morningstar analysts said.

The company has struck deals with Amazon, Alphabet and Microsoft to run OCI within their clouds, with revenue from these clients up 1,529 per cent in the first quarter.

Oracle’s remaining performance obligations, or RPO, the most popular measure of booked revenue, jumped 359 per cent to $455 billion in the quarter ended Aug. 31.

The stock is trading at over 33.34 times its 12-month forward earnings estimates, compared with Amazon’s 32.34 and Microsoft’s 30.83.

Oracle expects second-quarter revenue to rise 12 per cent to 14 per cent, and cloud revenue growth between 32 per cent and 36 per cent.

(Reporting by Akriti Shah in Bengaluru; additional reporting by Alun John in London Editing by Amanda Cooper and Shinjini Ganguli)