Oracle stock jumped sharply due to a combination of factors centered on its cloud infrastructure business and its pivotal role in AI technology. The key reasons include:
- Oracle reported a huge surge in demand for its cloud services driven by AI, leading to a massive 359% increase in its backlog of contracted but not yet recognized revenue, now around $455 billion.
- The company raised its full-year growth forecast for its Cloud Infrastructure division to a 77% revenue increase, projecting $18 billion this fiscal year, with further growth expected to reach $144 billion by 2030.
- Investors see Oracle transforming from just a software vendor to a critical backbone provider for AI infrastructure, securing multi-billion dollar contracts, including one with OpenAI for large-scale computing capacity.
- Despite a slight miss in quarterly earnings, the bullish outlook on cloud and AI-driven revenue excited investors and analysts, pushing shares up more than 30% in a single day, marking the largest daily gain since 1999.
- The surge made Oracle one of the top most valuable companies on Wall Street, with its market cap approaching $1 trillion. CEO Larry Ellison also saw a significant increase in his personal wealth due to the stock rise.
In summary, Oracle's stock jump is driven by its strategic position and strong growth prospects in AI-driven cloud infrastructure services, which investors expect to fuel long-term revenue expansion and market dominance in AI computing.
