“`html
Key Points
-
Global spending on AI is projected to hit $1.5 trillion in 2023 and reach $2 trillion by 2026.
-
Oracle has secured a $300 billion contract from OpenAI, contributing to its backlog which has risen to $455 billion.
-
Oracle aims to grow its Oracle Cloud Infrastructure (OCI) revenue from $10 billion to $144 billion by 2028.
As demand for cloud computing surge, tech giants Amazon, Microsoft, and Google are struggling to keep up. Meanwhile, Oracle has signed a significant $300 billion deal with OpenAI, which has helped raise its backlog of remaining performance obligations to $455 billion, up from $137 billion in Q4. Oracle plans to invest $35 billion this year in capacity expansion, while competing providers such as Microsoft and Amazon continue to spend heavily to meet similar demands.
While Oracle’s management is optimistic about OCI’s growth prospects, it faces challenges including $111 billion in debt and cash burn of $5.9 billion in the past year. Analysts caution that despite the promising contracts, risks remain, particularly in achieving profitability and effectively scaling up to meet large, established competitors.
“`
