Oracle (ORCL) stock jumped nearly 12% out of the gate Wednesday after the software giant announced artificial intelligence (AI) partnerships with OpenAI and Alphabet's (GOOGL) Google, which helped offset a top- and bottom-line miss for its fiscal fourth quarter.
In the three months ended May 31, Oracle's revenue increased 3.3% year-over-year to $14.3 billion, driven by a 9.2% rise in its Cloud Services & License Support segment to $10.2 billion. The company said earnings per share (EPS) declined 2.4% to $1.63 from the year-ago period.
The results were less than encouraging and came in below analysts' estimates. According to CNBC, Wall Street was anticipating revenue of $14.55 billion and earnings of $1.65 per share.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
However, the double miss was overshadowed by comments from Oracle CEO Safra Catz, who said she expects "strong AI demand" to fuel "double-digit revenue growth this fiscal year." Additionally, in two separate press releases, Oracle disclosed partnerships with Open AI and Google Cloud.
"In Q3 and Q4, Oracle signed the largest sales contracts in our history – driven by enormous demand for training AI large language models in the Oracle Cloud," Catz said in a statement. "In Q4 alone, Oracle signed over 30 AI sales contracts totaling more than $12.5 billion – including one with Open AI to train ChatGPT in the Oracle Cloud."
The deal with OpenAI will extend Microsoft's (MSFT) Azure platform to Oracle Cloud Infrastructure (OCI). This will give OpenAI additional capacity, Oracle said.
"The race to build the world's greatest large language model is on, and it is fueling unlimited demand for Oracle's Gen2 AI infrastructure," said Larry Ellison, chief technology officer and chairman of Oracle. "Leaders like OpenAI are choosing OCI because it is the world's fastest and most cost-effective AI infrastructure."
Meanwhile, the partnership with Alphabet will bring Oracle's database to Google Cloud later this year. The move will allow customers to combine Oracle and Google Cloud technologies to accelerate their application migrations and modernization without facing data transfer charges.
"Customers want the flexibility to use multiple clouds," Ellison said in a statement. "To meet this growing demand, Google and Oracle are seamlessly connecting Google Cloud services with the very latest Oracle Database technology. By putting Oracle Cloud Infrastructure hardware in Google Cloud datacenters, customers can benefit from the best possible database and network performance."
Is Oracle stock a buy, sell or hold?
"Oracle is one of the world's largest and most profitable software companies," says UBS Global Research analyst Karl Keirstead, who adds that the company's earnings report shows "the AI narrative is powerful."
Keirstead has a Buy rating on the tech stock and lifted his price target to $160 from $150 after earnings.
The UBS analyst finds himself in good company with his bullish outlook toward the blue chip stock, too. According to S&P Global Market Intelligence, the consensus analyst target price for ORCL stock is $143.92, representing implied upside of about nearly 5% to current levels. Additionally, the consensus recommendation is Buy.
Related Content
-
Stock Market Today: Stocks Skid Into Another Risk-Off TurnThe promise of the AI revolution can't overcome flickering hopes for a "Fed put."
-
With DOGE Making Cuts at National Parks, Can You Still Use Your Senior Pass?If you are a U.S. citizen or permanent resident 62 or older, you can still use your Senior Pass at any and all National Parks in the U.S. Here's what the Senior Pass is and how to use it.
-
Stock Market Today: Stocks Skid Into Another Risk-Off TurnThe promise of the AI revolution can't overcome flickering hopes for a "Fed put."
-
How to Survive Market Mayhem2025 is turning out to be a turbulent year for the market, but don't panic. Here are four ways investors can ride out the storm.
-
Alternative Investments Under Trump: What You Need to KnowAs access to alternative markets opens up, retail investors looking to enhance their long-term financial outcomes have more opportunities to carefully consider.
-
Beware of TV/Billboard Personal Injury Law Firms: Here's WhyIf you or someone you know is tempted to hire a so-called settlement mill to handle a personal injury case, here are some reasons to reconsider.
-
How Small Businesses Can Clear the Economic Hurdles AheadShifting rules on taxes, trade and regulation are creating uncertainty for SMBs. Owners can overcome that by focusing on efficiency, flexibility and investment.
-
Stock Market Today: Dow Adds 353 Points Despite Soft Retail SalesInvestors and traders shake off another set of shaky economic numbers and send 10 of 11 sectors higher on Monday.
-
CoreWeave IPO: Should You Buy CRWV Stock?The CoreWeave IPO will mark the biggest public offering of the year, with the AI cloud company expected to start trading on the Nasdaq in late March.
-
Nvidia Stock's Been Growing for Years. Just Look At Its 100,000% ReturnNvidia shareholders have had to stomach intense volatility over the years, but they have come out on top thanks to the AI chipmaker's bellwether status.
