Oracle Shares Set for Record High on AI-Fueled Cloud Growth

Oracle Corp. reported better-than-expected bookings and announced partnership deals with tech rivals, giving a boost to Chairman Larry Ellison’s effort to redefine the software maker as a major competitor in the business of cloud computing.

The company, known for its database software, is focused on expanding its cloud infrastructure unit — which rents computing power and storage — to compete with Inc., Microsoft Corp. and Alphabet Inc.’s Google. While this division produces a small portion of total sales, investors view it as Oracle’s major future growth bet.

Oracle shares jumped 8.9% in premarket trading in New York on Wednesday. If the gains hold, the stock is set to hit its highest level on record.

In the past two quarters, “Oracle signed the largest sales contracts in our history — driven by enormous demand for training AI large language models in the Oracle Cloud,” Chief Executive Officer Safra Catz said Tuesday in a statement.

Revenue growth will increase by double digits in the current fiscal year ending in May 2025, fueled by strong demand for artificial intelligence workloads, Catz said. Growth should accelerate through the year as the cloud unit’s “capacity begins to catch up with demand,” she added.

Oracle also announced a new agreement to make its namesake database available on Google’s cloud infrastructure. A similar deal with Microsoft, which was announced in late 2023, “will turbocharge our cloud database growth,” Ellison said in a separate statement.

OpenAI, which has received billions in funding from Microsoft, will use Austin-based Oracle’s cloud infrastructure for “additional capacity,” the companies said in a statement. Oracle’s cloud has developed a reputation for success with generative AI startups — the company touted customers including including Reka, MosaicML, and Elon Musk’s xAI. Artificial intelligence technology needs enormous computing power to work.