NEW YORK – Oracle has given investors a boost, saying its cloud computing business will continue to see rapid growth next year following strong performances in the past quarter.
The stock, which had soared to a record high at closing, rose another 3% in extended trading.
Cloud revenue grew 54% to US$4.4 billion (S$5.91 billion) in the fourth quarter, following a 45% increase in the prior quarter.
In the fiscal year ending May 2024, Cloud revenue should grow at least as much as the previous year, Chief Executive Safra Catz said on a post-earnings conference call.
Guggenheim Securities analyst John Diffucci said the sector’s continued strength was unusual given the current economic environment.
Austin, Texas-based Oracle is focusing on expanding its cloud infrastructure business to compete more strongly with market leaders Amazon and Microsoft, which have recently slowed.
The boom in generative artificial intelligence (AI), which requires enormous computing power, is driving demand for Oracle’s cloud services, executives say.
Generative AI startup Cohere announced last week that Oracle was among the investors in its $270 million funding round.
Barclays analyst Raimo Renshaw wrote after the results: “The narrative of growing cloud momentum, driven in part by AI demand, remains intact, and stocks are likely to maintain their recent strong momentum.”
In a statement on Monday, Oracle said cloud infrastructure revenue increased 76% to $1.4 billion in the period through May 31, and cloud application revenue increased 45% to $3 billion.
In a statement, Oracle Chairman Larry Ellison said in a statement that more than US$2 billion in cloud capacity was recently awarded to large-scale language model development companies such as Mosaic ML, Adept AI and Cohere.
“Oracle’s Gen2 Cloud has become our first choice for running generative AI workloads,” he said.
Total sales for the quarter increased 17% to US$13.8 billion.
The average analyst estimate is $13.7 billion, according to data compiled by Bloomberg.
Excluding certain items, earnings were $1.67 per share, versus an average estimate of $1.58.
“Both of our strategic cloud businesses are bigger and growing faster,” CEO Catz said in a statement. “This bodes well for an even stronger year in fiscal 2024.”
After closing at a record high of US$116.43 in New York, the stock hit a high of US$122.87 in extended trading.
Oracle is up 42% in 2023, while the iShares Enhanced Software ETF is up 32%.
Another big bet for Oracle, the year-old acquisition of digital health records provider Cerner (now called Oracle Health), generated US$1.5 billion in the quarter.
Oracle will begin laying off the division in early 2023 after executives pledged to improve profitability.
Catz said cloud growth, excluding Oracle Health, would be about 29% this quarter through August.
Total revenue is expected to increase by 8% to 10%, she said.
Analysts expected an average gain of 8%.
Earnings, excluding certain items, are expected to be between $1.12 and $1.16 per share.
Much of Oracle’s cloud revenue comes from business applications such as its Fusion software for corporate financial management and NetSuite’s enterprise planning tools for small and medium businesses.bloomberg
