Oracle investors hear the magic word 'Nvidia' and boom! Buy, buy, buy

Forget the piffle about real world results, let's look at the potential of wundertech

Oracle on Monday revealed its latest quarterly revenue haul, which fell just shy of market estimates. That said, it did tease an AI deal with en vogue Nvidia, which proved enough to bolster Big Red’s share price.

For its Q3 of fiscal 2024, ended February 29, the database, application and cloud infrastructure biz reported a seven percent year-on-year rise in turnover to $13.28 billion, and operating income of $3.8 billion, up 15 percent.

This came in under analysts' average estimate of $13.3 billion, although operating income beat expectations. The database goliath's stock price leaped more than 10 percent; its earnings-per-share of $1.41 outpaced Wall St's expected $1.38.

Oracle CEO Larry Ellison said customers want larger contracts “as they see firsthand how Oracle Cloud Services are benefiting their businesses. And we expect to have some very nice joint announcements with Nvidia next week.”

Last month, Nvidia said its Q4 revenue grew 265 percent year over year to reach $22.1 billion, amid staggering demand for its GPUs. The share price has shot up in the past year, valuing the chipmaker at $2.14 trillion and placing it behind Microsoft and Apple.

For Oracle's financials, though, the addition of health records software company Cerner, which it acquired for $28.3 billion in June 2022, created a “a significant headwind this year” for Oracle, CEO Safra Catz said on an earnings call, although it would “return to growth next year.”

Total revenues for Q4, including Cerner, were forecast to grow from four percent to six percent but excluding Cerner they would grow six percent to eight percent, she said.

On the call, Oracle founder and CTO Ellison said Oracle would completely reengineer its industry-specific applications to take full advantage of generative artificial intelligence.

The move includes healthcare where Oracle plans to introduce a new voice-activated Clinical Digital Assistant to listen to a doctor's consultations with a patient, which then “automatically generates prescriptions, doctor's orders, doctor's notes, then automatically updates the patient's electronic health records,” Ellison said.

In an effort to bolster its position in the cloud market — where Oracle remains a minor player well behind AWS, Microsoft Azure and Google Cloud — Ellison claimed it is “building the largest data centers in the world that we know of."

“We're building an AI data center in the United States where you could park eight Boeing 747 nose-to-tail in that one data center. We're bringing on enormous amounts of capacity over the next 24 months because demand the demand is so high,” he said.

The merest mention of AI is sufficiant to help inflate a company's share price - as Dell and HPE discovered. Researchers highlighted this point last year after sitting on earnings call and noting the difference between companies that used those two letters extensively versus those that didn't.

Now if only AI could solve the energy and water crisis that it is contributing to, maybe we'd all have something to smile about. ®

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