Oracle Projects Double-Digit Revenue Growth for Fiscal 2025, Surges on AI Cloud Demand and OpenAI Partnership
Oracle forecasts double-digit revenue growth for fiscal 2025, exceeding analysts' expectations. The company announces a partnership with OpenAI and Google Cloud to expand its cloud infrastructure offerings. CEO Safra Catz highlights the signing of over 30 AI sales contracts, including one with OpenAI, worth over $12.5 billion in the fourth quarter.
This projection indicates a robust demand for the company's AI-powered cloud services, leading to a 9% surge in Oracle's shares after the announcement.
In addition to the revenue forecast, Oracle has also revealed a strategic partnership with OpenAI, the creator of ChatGPT, and Google Cloud. This collaboration aims to expand Oracle's cloud infrastructure offerings to its customers.
Oracle's CEO, Safra Catz, expressed confidence in the company's growth trajectory, stating, "I expect that each successive quarter should grow faster than the previous quarter — as OCI (Oracle Cloud Infrastructure) capacity begins to catch up with demand." Catz further highlighted Oracle's recent achievements, including signing over 30 AI sales contracts worth more than $12.5 billion in the fourth quarter alone. Notably, one of these contracts involves training ChatGPT in Oracle Cloud for OpenAI.
The company's investments in AI are crucial to its efforts to compete with cloud giants like Microsoft, which has experienced rapid growth in its Azure cloud platform through its partnership with OpenAI. Oracle has also made substantial investments in hardware from chip giant Nvidia.
While Oracle's total revenue for the fourth quarter grew by 3% to reach $14.29 billion, it fell short of analysts' estimates of $14.55 billion. Analysts anticipate a 9% growth for fiscal 2025, following Oracle's 6% total revenue growth in fiscal 2024.
To achieve double-digit growth, Oracle's cloud business, currently the fourth-largest provider, needs to expand significantly. Gil Luria, a research analyst at D.A. Davidson, commented, "In the cloud market, Oracle is doing well as the fourth-largest provider, but that business has to grow far bigger to help overall growth achieve double digits."
Looking ahead, Oracle expects its first-quarter revenue to grow between 5% and 7%, slightly below analysts' estimate of a 7.6% rise.
CEO Safra Catz highlighted the company's success in securing large sales contracts in the third and fourth quarters, driven by the high demand for training AI large language models in Oracle Cloud.
Furthermore, Oracle's remaining performance obligations, a key measure of booked revenue, reached $98 billion in the fourth quarter, marking a 44% increase compared to the previous year.
In terms of earnings, Oracle reported adjusted earnings per share of $1.63, slightly below the estimated $1.65 per share.
Oracle forecasts double-digit revenue growth for fiscal 2025, exceeding analysts' expectations.
The company announces a partnership with OpenAI and Google Cloud to expand its cloud infrastructure offerings.
CEO Safra Catz highlights the signing of over 30 AI sales contracts, including one with OpenAI, worth over $12.5 billion in the fourth quarter.
Source: REUTERS