Oracle's RPO Surges 359% Year-Over-Year, Driven by AI Cloud Contracts

Oracle, a leading technology company, has announced a significant surge in its remaining performance obligations (RPO) to 4550 billion dollars, marking a 359% year-over-year increase. This growth is primarily driven by large-scale cloud contracts with top AI companies such as OpenAI, xAI, and Meta, positioning Oracle as a key infrastructure provider for AI model training. The company's CEO, Safra Catz, highlighted that Oracle has become the preferred destination for AI workloads, with a 3170 billion dollar increase in RPO in the first quarter alone.

To meet the surging demand, Oracle has increased its capital expenditure guidance for the fiscal year to approximately 350 billion dollars. The company projects that its cloud infrastructure (OCI) will grow by 77% this fiscal year, reaching 180 billion dollars, and continue to grow at a high rate over the next four years, ultimately aiming for a scale exceeding 1440 billion dollars. This growth is supported by Oracle's strategic investments in AI infrastructure, including the development of a new "AI Database" designed to leverage enterprise private data for advanced reasoning capabilities.

Oracle's Chairman and Chief Technology Officer, Larry Ellison, emphasized that AI is fundamentally transforming the company. He noted that while AI model training is a multi-billion dollar market, the AI reasoning market is even larger, encompassing applications such as automated factories, self-driving cars, drug design, financial market predictions, and automated legal and sales processes. Ellison believes that Oracle's strength in managing enterprise data gives it a unique advantage in the reasoning market, which is expected to be significantly larger than the training market.

The "AI Database" is a core component of Oracle's strategy to dominate the reasoning market. This new database allows enterprises to securely and efficiently use large language models (LLMs) to analyze their private data. By "vectorizing" data, Oracle enables AI models to understand and process enterprise information, combining it with public data for advanced reasoning. This capability is integrated with leading AI models such as ChatGPT, Gemini, Grok, and Llama, all available on the Oracle Cloud platform.

Oracle's aggressive capital expenditure and strategic investments are aimed at supporting its ambitious growth targets. The company plans to deploy significant infrastructure to meet the high demand for AI services, with a focus on high-speed networks and advanced GPU clusters. Ellison highlighted that Oracle's network capabilities allow it to move data at speeds that are twice as fast as competitors, resulting in cost savings and operational efficiencies.

In addition to its AI infrastructure, Oracle is also leveraging AI to enhance its own applications. Ellison revealed that the company's latest applications are being generated by AI, making Oracle a leader in application development. This AI-driven approach allows Oracle to create more efficient and effective applications, further solidifying its position in the market.

Oracle's strategic investments and innovative AI solutions position it as a leader in the rapidly evolving AI landscape. With a strong focus on both AI training and reasoning, Oracle is well-positioned to capitalize on the growing demand for AI services and drive significant growth in the coming years.