Oracle (ORCL.N), opens new tab, surged 13% on Tuesday, signaling the company was making headway in its goal to capture a piece of the cloud computing industry through its partnership with Nvidia, a leading manufacturer of AI chips.
The database giant has also hinted at potential collaborative announcements with Nvidia (NVDA.O), which might take place at the chip company’s GTC developer conference, which takes place from March 18 to 21. A new tab will open next week.
The startup is attempting to take on market leaders Amazon.com and Microsoft by positioning itself as a low-cost cloud provider and investing billions of dollars in Nvidia chips.
Oracle’s third-quarter cloud revenue increased by 25% due to these initiatives and a collaboration that allows its cloud clients to access Nvidia supercomputers. At the same time, the company’s remaining performance obligations, or sales backlog, increased by 29%.
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In a client note, Piper Sandler analysts stated, “Oracle Cloud momentum is back on track after witnessing disappointing cloud results in the prior two quarters.”
At $129.67 for premarket shares, the corporation was on course to increase its market value by about $40 billion.
The median view on the stock increased to $135.50 as a result of at least 14 analysts raising their price goals.
According to LSEG statistics, Oracle trades at 19 times its 12-month forward earnings expectations, while the software and IT services sector trades at 31.2 times.
Due to concerns that the company’s growth was being hampered by data center capacity limitations and an uncertain economic outlook, its shares underperformed large cloud competitors like Microsoft in 2023 and so far this year.
On Monday, Oracle CEO Safra Catz allayed some of those worries by stating that the company “signed several large deals this quarter, and we have many more in the pipeline”.
Editing by Pooja Desai; reporting by Aditya Soni in Bengaluru
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