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Oracle stock climbs on cloud deals with Google, OpenAI

Oracle (ORCL) shares are rising after announcing cloud deals with Google (GOOG, GOOGL) and OpenAI, despite missing on fourth quarter earnings and revenue.

Yahoo Finance's Seana Smith and Brad Smith break down the tech giant's earnings and its position in the AI race.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Melanie Riehl

Video transcript

Oracle shares rising after announcing cloud deals with both Google and Open A I.

But the company did miss on earnings and revenue in the fourth quarter here.

We're taking a look at the shares moving higher pre market by about 7% here.

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One of the huge things that was called out, especially during the quarter where they saw remaining performance obligation that RPO $98 billion up 18 billion from the third quarter and up 40% 44% year over year.

It really does come back to this deal making that they're able to do here and the number of people and companies that are relying on this is what they call the OC I the Oracle cloud infrastructure here.

And so this is the cloud services, the data centers here and the way that they describe it is that human beings don't run this operating system in the database, autonomous software robots do Larry Ellison saying that on the earnings call and you actually got a sense of how they think about these data centers and how they think about language learning models.

He he went as far as to call them actually more like neural networks if you will, because they're not just looking at language and ingesting that they're looking across photos of video and really having to run influential equations on top of that.

And so, uh it's, it's really interesting how this company is thinking about generative A I right now and that infused into its own cloud infrastructure.

Yeah, and how big of a driver they see this being ultimately here over the next couple of years, I think that is what the street is focusing on.

And that was enough here for investors to kind of look back the weakness that oracle presented here in its most recent quarter, even really what it's seeing here in 2024 and looking ahead to 2025 and how some of these partnerships that were announced with Google, with Microsoft with Open A I, how that is ultimately uh expected to drive the business here going forward.

And JP Morgan called it out in their notes saying that the guidance here aiming for acceleration to double digit growth here was enough here to satis by the street.

And, and from our recent conversations that we've had and even the conversations I was having la last week out in uh San Francisco at Bank of America's uh Global tech conference.

There was such a focus here on enterprise spent and what exactly that is going to look like.

And, and we talk about the next leg and the next phase or wave whatever you wanna call it of A I, what ultimately that is going to look like who is best positioned within that space.

And it's a lot of names like an oracle here that was mentioned just in terms of well positioned at this point in the cycle, in terms of the future adoption.

And ultimately, now the street even more bullish on what these partnerships with Google, what the partnership with Microsoft, what that ultimately here is going to mean for demand for their business.

Yeah, absolutely.

NVIDIA Microsoft, Google Xa, I open A I CO here and dozens more were brought up and mentioned names, drop on the earnings call as they were talking about OC here.

So I imagine it's an acronym.

We're going to hear a lot more whether I keep bringing it up or whether the company keeps talking about it one way or another.