Oracle exceeded expectations with its fourth-quarter revenue and provided an optimistic forecast for the first quarter, driven by the increasing demand for its cloud offerings from companies implementing artificial intelligence (AI).
Oracle’s foray into the cloud computing market is yielding positive results, partly due to its acquisition of electronic medical records company Cerner last year. This acquisition has enhanced its competitiveness against industry giants like Microsoft and Amazon.
The company has also strengthened its AI cloud offerings, including a partnership with Nvidia to provide the chip company’s AI software and chips to Oracle customers through its cloud services.
In the fourth quarter, Oracle’s revenue surged by approximately 17% to $13.84 billion, surpassing analysts’ estimates of $13.74 billion according to Refinitiv. Cloud revenue experienced a significant increase of 54% to $4.4 billion.
Analysts believe that Oracle Cloud Infrastructure (OCI), backed by its collaboration with Nvidia, is well-positioned to become a prominent AI/machine learning development platform, presenting another avenue for emerging growth. Oracle Chairman and CEO Larry Ellison highlighted that numerous AI development companies, including Mosaic ML, Adept AI, and Cohere, along with 30 others, have recently signed contracts to purchase over $2 billion worth of capacity in Oracle’s Gen2 Cloud for large language model (LLM) development.
For the first quarter, Oracle anticipates a total revenue growth of 8% to 10%. Analysts had, on average, expected growth of approximately 8%. Oracle CEO Safra Catz stated during a conference call with analysts that the company expects cloud revenue, excluding Cerner, to grow at similar rates in fiscal 2024 as it did in 2023.
Following the positive announcements, Oracle’s shares, which closed at a record high of $116.43 on Monday, rose to $120.53 in after-hours trading.
