Oracle (NYSE: ORCL) It’s not the largest cloud service provider, but it is one of the fastest growing right now, and the company, once best known for database management, is betting on developing its presence in the cloud and serve artificial intelligence (AI). customers. The efforts are working, and demand and revenue for cloud infrastructure has skyrocketed of late.
In fact, in Oracle’s quarterly report this week, the company announced a 42% increase in cloud infrastructure revenue to $2 billion. And Oracle even forecast double-digit full-year revenue growth based on current demand for AI. The company is showing that it is attracting customers (it even signed the largest contracts in its history in the last two quarters) and that it can compete with larger cloud service providers. On top of this, Oracle shared news that could be huge for the company and shareholders. We’ll see.
Oracle’s focus on cloud infrastructure
As mentioned, Oracle is focusing on expanding and strengthening its cloud infrastructure offerings and serving AI customers. This helped the company sign the largest sales contracts in its history in the most recent quarter with customers looking to train large language models. In the quarter, Oracle signed around 30 AI contracts worth more than $12 billion.
This demand is driving up Oracle’s remaining performance obligation (RPO), or expected revenue from contracted services: In the quarter, RPO advanced 44% to $98 billion. And the company says this momentum should continue, giving us reason to be optimistic about revenue in the coming quarters.
Now let’s move on to the big news that should reinforce our optimism. Oracle announced two major AI deals involving market giants, a sign that Oracle has joined the ranks of today’s top AI companies. OpenAI, the developer of the popular ChatGPT chatbot, will run AI and deep learning workloads on Oracle Cloud infrastructure. AND AlphabetGoogle signed a multi-cloud partnership with Oracle, making it easier for customers to deploy projects on both clouds. As part of the agreement, Oracle will offer “Oracle Database on Google Cloud” starting in September.
These two deals in particular should help Oracle stand out and gain market share in the high-growth area of AI. The company’s progress in securing contracts has been promising and these deals could reinforce that momentum.
A leader in multi-cloud partnerships
Oracle may be a smaller cloud player than its rivals, but the company offers advantages that are being recognized. The agreement with Google represents another multi-cloud partnership, following a previous agreement with microsoft, and these agreements offer clients flexibility, a great advantage. And the flexibility doesn’t end there. Oracle also offers other solutions such as sovereign cloud and even Oracle Alloy, which allows customers to run their own Oracle-based cloud. Oracle is also known for its competitive prices, generally lower than those of its rivals, another plus point for winning contracts.
So, along with Oracle’s advantages and the revenue gains its cloud business has achieved of late, these deals with OpenAI and Alphabet represent more good news for the company and its investors. This translated into a more than 13% rise for the stock in one trading session after Oracle announced the deals, and the stock hit a record high.
Of course, this is just a short-term stock move, but it’s not unexpected: Oracle stock has already gained momentum, gaining 20% over the past year. And if Oracle continues to generate revenue growth, expand its capacity and work with other major cloud providers, the stock could continue to gain.
Is it too late to participate in Oracle’s AI growth story? You are welcome. The stock trades for just 22 times forward earnings estimates, a real bargain considering all the points I made above. So right now, you can buy this tech player for a song and rejoice in the massive news that Oracle recently delivered: news that could match long-term earnings and stock price growth.
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Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Adria Cimino has positions at Oracle. The Motley Fool has positions and recommends Alphabet, Microsoft and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Massive news for Oracle stock investors was originally published by The Motley Fool