American tech giant Oracle predicted on Tuesday that its revenue would achieve double-digit growth by the fiscal year 2025, surpassing analyst expectations, showing strong demand for its AI cloud services. Consequently, the company's stock price rose by 9% after the close. Oracle also announced partnerships with ChatGPT manufacturer OpenAI and Google Cloud to extend its proprietary cloud infrastructure to clients.
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CEO Safra Catz stated, "I anticipate that the growth rate of each quarter will exceed that of the previous quarter, as the capabilities of Oracle's cloud infrastructure begin to meet demand." "In just the fourth quarter, Oracle signed over 30 AI sales contracts, totaling more than $12.5 billion, including a contract with OpenAI to train ChatGPT in Oracle's cloud."
AI investment plays a crucial role in Oracle's efforts to catch up with cloud giants like Microsoft. Microsoft, due to its partnership with OpenAI, has also seen rapid growth in its Azure cloud. Oracle has also invested billions in hardware with chip giant Nvidia. The company's total revenue grew by 3% in the fourth quarter, reaching $14.29 billion, but fell short of the $14.55 billion expected by Thomson Reuters LSEG.
Gil Luria, a research analyst at D.A. Davidson, said, "In the cloud market, Oracle, as the fourth largest provider, is performing well, but this business must achieve greater growth to help overall growth reach double digits." Oracle reported a 6% increase in total revenue for the fiscal year 2024, with analysts expecting a 9% growth by the fiscal year 2025. The company expects first-quarter revenue to grow by 5% to 7%, while analysts predict a 7.6% growth.
Catz noted, "In the third and fourth quarters, Oracle signed the largest sales contracts in our history, driven by the huge demand for training large language models in Oracle's cloud." The remaining performance obligations, the most popular measure of booked revenue, reached $98 billion in the fourth quarter, a 44% increase from a year ago. The company's adjusted earnings per share were $1.63, slightly below the analyst expectation of $1.65.