Oracle announced on Monday that it will make a joint announcement with chip giant Nvidia, and it surpassed quarterly profit estimates, riding on a 14% boom in generative AI demand.
Oracle (ORCL.N), opens new tab, said on Monday it is due to make a joint announcement with chip giant Nvidia (NVDA.O), opens new tab, and it topped quarterly profit projections, riding on a surge in generative AI demand, sending shares up over 14% in extended trade.
Oracle’s stock market worth increased by more than $40 billion as its shares rallied late in the day.
The 46-year-old database company has been attempting to recast itself as a cloud computing provider by selling services at a lower cost than competitors such as Amazon.com (AMZN.O.).
It has attempted to drum up demand for its subscription services through agreements with rival Microsoft (MSFT.O), opens a new tab, and AI chip leader Nvidia, which develops chips that power supercomputers and can be used by customers of Oracle’s cloud service.
“We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply—despite the fact we are opening new and expanding existing cloud datacenters very, very rapidly,” said Safra Catz, the company’s chief executive officer.
Oracle officials mentioned Nvidia at least three times during their analyst call, stating that a joint announcement would be made in the next week.
Excluding adjustments, the company reported a third-quarter profit of $1.41 per share, up 16% from LSEG’s expectation of $1.38.
“While the results for the quarter were merely in line with expectations, investors are excited about the new business Oracle won during the quarter,” said Gil Luria, a research analyst at D.A. Davidson.
Remaining performance obligations, the most popular indicator of booked income, increased by 29% over the previous year, indicating a positive outlook for the next results, Luria said.
However, sales of $13.28 billion for the three months ending February 29 were lower than analysts’ average expectation of $13.30 billion.
According to LSEG data, Oracle expects sales growth of 4%–6% in the current quarter, which is lower than analysts’ average expectation of 6.5%.
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