Oracle surges to record high as AI demand helps reignite cloud business momentum
Reuters
Published Mar 12, 2024 06:45AM ET
Updated Mar 12, 2024 10:01AM ET
(Reuters) -Oracle soared more than 13% to reach a record high on Tuesday, on signs the company was making progress in its plan to grab a share of the cloud-computing market thanks to its tie-up with AI chip giant Nvidia (NASDAQ:NVDA).
The database megacorp also teased joint announcements with Nvidia coming up next week, which could be made at the chip firm's GTC developer conference that runs from March 18 to 21.
The company has pitched itself as a low-cost cloud provider and spent billions of dollars on Nvidia chips as it looks to compete with industry heavyweights Amazon.com (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT).
Those efforts, as well as a partnership that gives its cloud customers access to Nvidia supercomputers, helped Oracle (NYSE:ORCL) post a 25% jump in cloud revenue for the third quarter, while its remaining performance obligations, or sales backlog, rose 29%.
"Oracle Cloud momentum is back on track after witnessing disappointing cloud results in the prior two quarters," analysts at Piper Sandler said in a client note.
The company was on track to add more than $40 billion to its market value, based on its share price of $129.37.
At least 14 analysts raised their price targets on the stock, pushing the median view to $135.50. Oracle trades at 19 times its 12-month forward earnings estimates, compared with 31.2 for the software and IT services sector, per LSEG data.
Its shares underperformed big cloud rivals such as Microsoft in 2023 and thus far this year, on worries that data center capacity constraints and an uncertain economic outlook were weighing on the company's growth.
CEO Safra Catz dispelled some of those concerns on Monday, saying Oracle "signed several large deals this quarter, and we have many more in the pipeline".
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Written By: Reuters
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