Oracle shares rose almost 9% on Wednesday as demand for low-cost cloud infrastructure services from artificial intelligence applications grew. If these gains continue, the company’s value will add another $28 billion to its $340 billion market capitalization from Tuesday’s close.
Oracle is rapidly expanding its cloud infrastructure unit, aiming to grow by renting cloud computing and storage services to companies. However, it faces stiff competition from Alphabet’s Google, Microsoft, and Amazon.com. Oracle’s cloud infrastructure marketed as a more affordable option compared to its rivals, attracting venture capital-backed generative AI startups, including Elon Musk’s xAI.
Strategic Collaborations
On Tuesday, Oracle announced a collaboration with ChatGPT maker OpenAI and Google Cloud to extend its cloud infrastructure to more customers. “The announcement that OpenAI will now use OCI (Oracle Cloud Infrastructure) enhances Oracle’s reputation as an AI platform, and the new relationship with Google expands the company’s database deployment,” wrote Evercore analyst Kirk Materne. This partnership allows OpenAI to use Microsoft’s Azure platform on Oracle’s infrastructure in some use cases, while new language learning models are trained on a supercomputer built by Microsoft.
Market Position and Financial Performance
Oracle’s stock is trading at 19.59 times forward earnings estimates, lower than Amazon.com’s 36.35, Microsoft’s 32.60, and Alphabet’s 21.85. Despite the recent rise, Oracle’s fourth-quarter results did not meet forecasts, as its legacy database and enterprise resource planning (ERP) software business faces competition from cheaper alternatives. “We think there’s been a big shift away from Oracle software to competing database and ERP software firms because of massive digital transformations,” Morningstar analyst Julie Sharma said.
Future Outlook
Oracle’s strategic moves in AI and cloud infrastructure, including partnerships with leading AI developers and competitive pricing, position it well to capitalize on the growing demand for AI-driven cloud services. However, maintaining and growing its market share will require continued innovation and competitive pricing in a market dominated by major players like Google, Microsoft, and Amazon.
Source: https://www.cioupdate.com.tr/teknoloji/bulut-bilisim/oracle/
