The Oracle (ORCL) stock are up since Monday evening, after the tech giant reported fiscal first-quarter earnings and sales that beat expectations. In addition, Oracle also announced a strategic partnership with Amazon Web ServicesA’s cloud services rivalmazon.com (AMZN).
Oracle reported that it earned $1.39 per adjusted share on sales of $13.3 billion in the August quarter. Analysts on average had projected that the Austin, Texas-based company would post adjusted earnings of $1.33 per share on sales of $13.2 billion, according to FactSet. For the same period last year, Oracle reported adjusted earnings of $1.19 per share on sales of $12.5 billion.
On Tuesday, Oracle shares are up more than 9% – This move signals a breakout beyond the flat-base buy point of 146.59 identified by MarketSurge pattern recognition.
“As cloud services became Oracle’s largest business, both our operating income and earnings per share growth accelerated,” Oracle CEO Safra Catz said in a press release.
Oracle highlights AI push
Oracle shares had gained more than 30% so far this year before the report. Its strong performance was driven by the growth of its Oracle cloud infrastructure business, which has won cloud computing contracts with AI-focused startups. This has helped Oracle overcome the struggles that have plagued other software stocks this year.
In its earnings report on Monday, Oracle said it won 42 new cloud contracts for graphics processing units (GPUs), worth a total of $3 billion. GPUs are the chips that power the training and production of AI models. President and CTO Larry Ellison said in a press release that Oracle is building a data center with “acres of Nvidia (NVDA) GPU clusters to train AI models at scale.”
Oracle’s cloud infrastructure revenue increased 45% to $2.2 billion, marking a slight acceleration compared with the 42% year-over-year increase in the May quarter. Cloud infrastructure sales increased 49%, 52% and 66% over the prior quarters.
Meanwhile, Catz said Oracle’s remaining performance obligations, or contracted work, grew 53% year over year to $99 billion.
“The RPO growth shows the strong momentum of Oracle Cloud and Oracle’s story in AI,” Barclays analyst Ramo Lenschow said in a note to clients. “This strong bookings number should give investors confidence that Oracle can accelerate revenue this year and next, and makes fiscal 2026 targets even more realistic, in our view.”
Lenschow rates Oracle shares Overweight Positive.
Oracle’s long-term guidance for fiscal 2026 includes a revenue target of $65 billion. On a call with analysts Monday, Catz reiterated Oracle’s expectations for double-digit revenue growth for the fiscal year ending in May 2025. Sales grew 6% for Oracle’s fiscal 2024.
Oracle partners with Amazon
The “biggest news of all” from Oracle’s earnings report, as Catz described it in his statement, is a multicloud deal with AWS, the largest cloud server provider by market share.
Ellison said in a separate press release focused on the deal that Oracle is seeing “tremendous demand” from customers wanting to use multiple cloud providers.
“To meet this demand and give customers the choice and flexibility they want, Amazon and Oracle are seamlessly connecting AWS services to the latest Oracle database technology, including the Oracle Autonomous Database,” Ellison said in the statement.
Oracle signed similar deals with Microsoft (MSFT) and Google Cloud parent Alphabet (GOOGL) over the past 12 months, leading to some speculation in the market that Amazon would be next. However, there is a complicated history between the two companies. Oracle’s race to catch up to Amazon in cloud services often included public exchanges of disparaging remarks between Ellison and Amazon CEO Andy Jassy, who ran AWS before taking the top job at Amazon.
The two rivals appear to be putting aside those differences to offer Oracle Database@AWS. Ellison and AWS CEO Matt Garman will discuss the partnership tomorrow at Oracle’s annual CloudWorld event in Las Vegas.
Evercore ISI analyst Kirk Materne said the partnership “helps illustrate that Oracle’s hold with customers remains strong and could potentially help more on-premises workloads move to the cloud at a faster pace.” Materne rates Oracle’s stock an Outperformer.
Source: Ambito
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