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Oracle surpasses quarterly profit predictions on AI demand, shares jump

Figurines with computers and cellphones are pictured in front of Oracle logo in this image shot, February 19, 2024

March 11 (mod1s) - Oracle (ORCL.N), opens new tab announced on Monday it is preparing to make a joint announcement with chip-giant Nvidia (NVDA.O), opens new tab, and it surpassed predictions for quarterly earnings, riding on the generative AI demand surge, driving shares up about 14% in extended trade. 

The late-day rise in Oracle's shares added more than $40 billion to its stock market valuation. 

The 46-year-old database company has been striving to recast itself as a cloud-computing provider by selling services cheaper than those of competitors such as (AMZN.O), opens new tab.

It has sought to drum up demand for its subscription plans via agreements with competitor Microsoft (MSFT.O), opens new tab and AI chip leader Nvidia, which develops processors that power supercomputers and can be used by clients of Oracle's cloud service. 

"We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply — despite the fact we are opening new and expanding existing cloud datacenters very, very rapidly," CEO Safra Catz stated.

Oracle officials addressed Nvidia at least three times during their discussion with investors and stated a joint announcement would be made in the next week. 

Excluding adjustments, the business declared earnings of $1.41 per share for the third quarter, up 16%, exceeding LSEG projections of $1.38 per share. 

"While results for the quarter were merely in line with expectations ...investors are excited about the new business Oracle won during the quarter," said Gil Luria, a research analyst at D.A. Davidson.

Remaining Performance Obligations, the most common indicator of booked income, was up 29% compared with a year earlier, which speaks positively for the next results, Luria added. 

However, sales of $13.28 billion for the three months ended February 29 was below analysts' average forecast of $13.30 billion. 

For the current quarter, Oracle predicted revenue growth to be in the range of 4%-6%, which was below analysts' average expectation of roughly 6.5%, according to LSEG data.


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