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Oracle cloud strategy boosts stock to all-time high

Written by Wed 13 Mar 2024

On Tuesday, Oracle stocks rose more than 13%, reaching an all-time high. 

Reuters reported this surge was attributed to investor confidence in the company’s strategic advancements toward capturing a portion of the cloud computing market, bolstered by its collaboration with industry leader NVIDIA.

Oracle has positioned itself as a cost-effective option in this industry, investing significant resources in NVIDIA chips to enhance its competitive edge against companies like Amazon and Microsoft. 

The computer software company has also formed a partnership that allows its cloud customers to utilise NVIDIA supercomputers. Due to these efforts, Oracle experienced growth in its cloud revenue which increased by 25% in Q3. Oracle’s sales backlog rose by 29% which indicated strong demand for its cloud services. 

“Oracle Cloud momentum is back on track after witnessing disappointing cloud results in the prior two quarters,” said analysts at Piper Sandler in a client note.

Based on a share price of £99.53 ($129.37), the company was anticipated to add over £31.2 billion ($40 billion) to its market value. Analysts have raised their price targets for Oracle’s stock, with the median view reaching £105.88 ($135.50). 

Compared to the software and IT services sector’s average, Oracle trades at a lower price-to-earnings ratio. However, Oracle’s shares have lagged behind competitors like Microsoft due to concerns about data centre capacity constraints and economic uncertainty. 

On Monday, the CEO of Oracle, Safra Catz, sought to address these concerns by highlighting Oracle has ‘signed several large deals this quarter, and we have many more in the pipeline’. 

In September, Oracle announced the upcoming availability of the new Oracle Cloud Infrastructure (OCI) Compute instances powered by NVIDIA and Ampere hardware.

The new OCI Compute instances aim to make running a variety of workloads in the cloud more accessible to organisations. These workloads range from training, fine-tuning, and AI model inferencing to running cloud-native applications and video transcoding applications.

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Written by Wed 13 Mar 2024

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