Oracle's Stock Skyrockets by 28% as Cloud Business Booms and AI Strategy Takes Shape

Oracle's stock soared after the company reported a substantial increase in first-quarter business bookings and significantly raised its revenue guidance for its cloud infrastructure business. Following the latest quarterly results, Oracle shares surged by 28% in after-hours trading. If this trend continues into the subsequent trading days, it could mark the company's largest single-day increase since 1999, potentially elevating its market capitalization by approximately $190 billion, surpassing $800 billion.

This market cap growth would position Oracle ahead of major corporations like JPMorgan Chase, Walmart, Eli Lilly, and Visa, making it the tenth largest company in the S&P 500 by market value, estimated at around $870 billion. Since the start of the year, Oracle's stock has risen by 45%, four times higher than the S&P 500's advance over the same period.

Oracle, a leader in database software, has made significant strides in the competitive cloud computing space. Earlier this year, it signed a groundbreaking agreement with OpenAI, securing 4.5 GW of data center capacity. This capacity is comparable to the electricity needed to power millions of American homes. Notable customers of Oracle’s cloud services include TikTok and Nvidia, underscoring its relevance in the sector.

Oracle's co-founder, Larry Ellison, stated that an Oracle AI database service will launch in October, allowing customer data stored in Oracle databases to be leveraged by AI models from OpenAI and other companies. This integration is part of Oracle's strategy to strengthen its collaboration with OpenAI and expand its offerings in AI technologies.

The company's reported booking figures have boosted its remaining performance obligations to $455 billion by the end of the first fiscal quarter, exceeding year-ago figures by more than fourfold. Oracle's CEO, Safra Catz, anticipates these bookings will drive rapid growth in the cloud infrastructure business, projecting it to expand by 77% to reach $18 billion this fiscal year, with continued robust growth through fiscal 2030.

Catz highlighted the high demand for Oracle's cloud infrastructure, noting that multiple multibillion-dollar agreements have been secured with various clients. The forecast for fiscal years beyond 2030 includes achieving an annual revenue of $144 billion from cloud infrastructure.

Despite Oracle's recent financial performance falling short of some expectations, particularly in adjusted earnings and quarterly revenue—$1.47 per share and $14.9 billion, respectively—its cloud business outperformed, growing 55% to $3.3 billion. The company has invested heavily in GPUs from Nvidia to enhance its cloud offerings to large-scale tech firms like Amazon and Google, with related revenues jumping by over 1500% in the first fiscal quarter.