Oracle shares rise 10% on artificial intelligence demand, new deals with Google and OpenAI | Wilnesh News

Oracle Shares of the software company rose more than 10% on Wednesday, a day after it reported fourth-quarter results and struck cloud deals with customers. Microsoft-Supports OpenAI and Google.

The company reported revenue of $14.29 billion for the quarter, up 3% year over year, below LSEG analysts’ expectations of $14.55 billion. Oracle’s adjusted earnings per share were $1.63, compared with analysts’ expectations of $1.65.

Oracle also reported $98 billion in remaining performance obligations (RPO) for the fourth quarter, a figure that represents the revenue the company expects to earn from contracts in future quarters. Chief Executive Safra Catz said the company signed large sales contracts in the third and fourth quarters, driven primarily by demand for using Oracle Cloud to train artificial intelligence models. A release.

In addition to the results, Oracle said it is working with Microsoft and OpenAI to help provide the startup with additional computing power. Oracle also announced that it will bring its database to Google Cloud.

Citi analysts said Oracle’s sluggish revenue in the fourth quarter was offset by “significant growth in RPO bookings.” They said it’s hard to ignore the $98 billion backlog, but they’d like to see better signs of how it will translate directly into revenue.

“Taking a step back, we view the results as mixed,” analysts wrote in a note on Tuesday.

Analysts at UBS said the highlight of Oracle’s performance was its “continuous growth of $18 billion in backlog.” They noted that the company missed some “key” metrics, but agreed with another investor that the quarter’s results reflected more of a narrative story than a numbers story.

“The artificial intelligence narrative is strong enough to lift market sentiment,” they said in a note on Wednesday.

UBS reiterated its buy rating on the stock.

Morgan Stanley analysts said Oracle’s quarterly results were mixed, but “the near-term artificial intelligence buildout is likely to win out and sustain the stock’s momentum.” Even so, they said they remain concerned about the nature of the contracts Oracle has booked and the There are long-term questions about the impact on gross margins.

“As investors focus on vendors involved in building GenAI infrastructure, these impressive bookings and the addition of large customers such as OpenAI could put Oracle more firmly in the spotlight,” analysts wrote in a note on Wednesday. focus on.

—CNBC’s Michael Bloom and Jordan Novet contributed to this report.