TLDR
- Oracle stock surged 36% after revealing $455 billion in contracted future revenue, up 360% year-over-year
- Company signed four multibillion-dollar AI infrastructure deals including reported $300 billion OpenAI contract
- Oracle Cloud Infrastructure business projected to reach $144 billion annually by 2030
- Stock rally made Larry Ellison world’s richest person, surpassing Elon Musk’s net worth
- Capital expenditure budget increased to $35 billion to build AI data center capacity
Oracle Corporation stock posted its largest single-day gain since 1992 on Wednesday. Shares jumped 36% after the company revealed massive growth in its AI infrastructure business.
The database software giant reported remaining performance obligations of $455 billion. This metric tracks contracted future revenue from existing customer agreements.
Oracle’s backlog surged 360% compared to the same quarter last year. Deutsche Bank analyst Brad Zelnick called the results “truly awesome” in a research note.
The stock rally added over $250 billion to Oracle’s market value. Trading closed at $328.33, pushing the company’s total valuation above $920 billion.
Oracle CEO Safra Catz disclosed the company signed four multibillion-dollar contracts during the first quarter. Three separate customers committed to these massive infrastructure deals.
AI Giants Choose Oracle Infrastructure
Oracle’s client roster includes major AI companies like OpenAI, xAI, Meta, Nvidia and AMD. The Wall Street Journal reported Oracle secured a $300 billion five-year agreement with OpenAI.
The company’s neutral positioning in AI infrastructure attracts customers seeking alternatives to Amazon and Microsoft. Oracle doesn’t develop competing AI models that conflict with client interests.
Oracle projects its Cloud Infrastructure division will grow 77% this fiscal year. Current annual revenue should reach $18 billion for this business segment.
Looking ahead to 2030, Oracle forecasts cloud infrastructure revenue hitting $144 billion annually. This represents exponential growth from today’s levels.
The company raised capital expenditure guidance to $35 billion from a previous $25 billion estimate. These investments will fund new data centers and AI computing equipment.
Analyst Reactions Mixed Despite Rally
JPMorgan analyst Mark Murphy lifted his price target to $270 from $210. However, he questioned Oracle’s customer concentration risk given the large contract sizes.
Bank of America upgraded Oracle to Buy from Neutral rating. Analyst Brad Sills noted questions remain about AI cloud business profitability margins.
William Blair’s Sebastien Naji described Oracle’s contract backlog as “astonishing.” The results validate growing market optimism about AI infrastructure demand.
Oracle’s surge helped lift other AI-related stocks Wednesday. Nvidia gained 4% while AMD rose 3.5% in midday trading.
The rally pushed both the S&P 500 and Nasdaq to record closing highs. Oracle’s results reinforced investor confidence in the ongoing AI technology boom.
Oracle stock gained 97% year-to-date through Wednesday’s close. Shares added another 1% in Thursday premarket trading.
Despite the stock surge, Oracle missed Wall Street earnings expectations. The company reported $1.47 per share versus analyst estimates of $1.48 per share.
The disconnect between earnings results and stock performance highlights investor focus on future growth potential. Oracle’s massive contract backlog suggests strong revenue visibility for coming years.
