Amidst the artificial intelligence (AI) boom, winners are emerging, and Oracle is leading the charge, surprising even seasoned investors. The launch of ChatGPT has ignited a technological race, with Oracle firmly entrenched in the forefront of innovation.
Oracle’s recent fiscal third-quarter earnings report revealed staggering growth in its cloud infrastructure business, propelling the stock to an 11% surge on Tuesday. Despite an overall revenue increase of 7% to $13.3 billion, which aligned with estimates, the real standout was the cloud infrastructure sector, boasting a remarkable 49% revenue leap to $1.8 billion, outstripping competitors like Amazon Web Services (AWS) and Microsoft Azure.
Oracle’s strategic collaborations with industry giants like Nvidia and Microsoft have fueled its ascent, offering a cost-effective cloud computing solution distinguished by robust security features and cutting-edge clustering technology tailored for AI workloads.
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The Unmatched Strength of Oracle’s Cloud
Oracle’s cloud infrastructure might be smaller in size compared to Azure, AWS, or Google Cloud, but it boasts advanced security features and a groundbreaking service called Oracle Alloy, introduced in late 2022. This service enables any Oracle cloud partner to evolve into a cloud provider, catering to unique requirements.
Larry Ellison, Oracle’s co-founder and Chief Technology Officer, highlighted how Alloy is attracting sovereign customers, with the company’s contract with NRI, operating the Tokyo Stock Exchange, garnering attention from peers in Japan.
Ellison boldly predicted, “We will end up with more data centers and cloud regions than all the other hyperscalers combined,” underscoring Oracle’s remarkable growth trajectory and unmatched demand-supply equilibrium.
Oracle’s Potential Growth as an AI Stock
Oracle’s cloud business, fueled by AI applications, presents disruptive potential amidst its legacy operations. With a backlog increase of $15 billion surpassing quarterly revenue, Oracle is clearly poised for substantial growth.
The company’s unique strengths, including cost-effectiveness, security reputation, flexibility through Alloy, and strategic partnerships, position it to grab market share from competitors. As the cloud business expands, overall revenue is expected to accelerate, accompanied by margin expansion.
With a promising future outlook and a robust demand pipeline, Oracle stands out as a compelling AI stock for long-term investors.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
