Oracle's stock is up significantly due to a surge driven mainly by bullish long-term growth forecasts for its cloud infrastructure business, especially its AI-driven cloud services. Despite a recent quarterly earnings report that fell short of expectations, the company projected an eight-fold increase in cloud infrastructure revenue over the next four years, reaching $144 billion by 2030. This optimistic forecast has excited investors, along with Oracle securing multiple multibillion-dollar contracts, including deals with top AI firms like OpenAI and Meta. Key factors behind the stock uplift include:
- A massive increase in Oracle’s remaining performance obligations (contract backlog) to $455 billion, up 359% year-over-year.
- Strong demand for AI infrastructure and cloud services that leverage Nvidia GPUs.
- Oracle's unique positioning in AI inference through its database technology.
- Wall Street analysts raising price targets significantly based on Oracle's AI and cloud growth potential.
- The company's plans for expanding data centers and capital expenditures to support AI workloads.
These developments led Oracle's stock to soar up to 43% in a single day and brought its market valuation close to the $1 trillion mark, with Larry Ellison becoming one of the richest people worldwide thanks to this surge. However, there is some caution as a significant portion of growth depends on contracts with a few large clients, notably OpenAI. Overall, Oracle's stock rise is primarily fueled by investor enthusiasm around its AI cloud infrastructure growth prospects and the large contract backlog it has built up recently, positioning it as a major player in the AI cloud space.
