Oracle Corp. witnessed a notable rise in its shares, climbing approximately 10 percent in after-hours trading on the NYSE, following the announcement of its AI cloud infrastructure partnerships with Microsoft, OpenAI (the creator of ChatGPT), and Google Cloud.
Despite reporting earnings and revenues below market expectations for the fourth quarter, the company revealed a positive outlook for fiscal year 2025, anticipating sustained strong AI demand to drive higher sales and backlog, ultimately resulting in double-digit revenue growth.
In a joint statement, Oracle, Microsoft, and OpenAI revealed their collaboration to expand the Microsoft Azure AI platform to Oracle Cloud Infrastructure (OCI), thereby enhancing capacity for OpenAI's operations. OpenAI, known for developing ChatGPT, serves over 100 million users with its generative AI services each month.
Larry Ellison, Oracle's Chairman and CTO, highlighted the competitive landscape in developing the world's leading large language model, noting that the demand for Oracle's Gen2 AI infrastructure is immense. "Leaders like OpenAI are choosing OCI because it offers the fastest and most cost-effective AI infrastructure globally," he stated.
Sam Altman, CEO of OpenAI, added that the OCI extension will bolster Azure's platform, facilitating OpenAI's continued expansion.
Under this agreement, OpenAI will join numerous AI innovators globally that leverage OCI's AI infrastructure for their AI workloads. Oracle pointed out that companies such as Adept, Modal, MosaicML, NVIDIA, Reka, Suno, Together AI, Twelve Labs, and xAI utilize OCI Supercluster for training and deploying next-generation AI models.
In a separate development, Oracle and Google Cloud announced a new partnership. This collaboration will allow customers to integrate OCI and Google Cloud technologies, thus accelerating their application migrations and modernization efforts. Google Cloud will offer OCI database services and a high-speed network interconnect with Oracle. The Cross-Cloud Interconnect will initially be available for customer onboarding in 11 global regions, with a forthcoming release of Oracle Database@Google Cloud later this year. This new offering will ensure top-tier Oracle database and network performance, along with matching features and pricing similar to OCI.
Despite these strategic alliances, Oracle reported a decline in fourth-quarter net profit to $3.14 billion, or $1.11 per share on a reported basis, and $4.61 billion or $1.63 per share on an adjusted basis, both missing market estimates. The quarterly revenue increased by 3.3 percent to $14.29 billion, yet still fell short of market expectations.
Oracle's stock ended Tuesday's regular trading session at $123.88, down 0.50 percent, but surged 9.5 percent to $135.60 in after-hours trading.
