Oracle beats profit estimates driven by AI demand, shares surge

Oracle beats estimates: Oracle announced on Monday that it is preparing to make a joint announcement with chip giant Nvidia. 

The company surpassed quarterly profit estimates, propelled by the surge in demand for generative AI technology. 

The update propelled Oracle's shares up by nearly 14 per cent in after-hours trading, adding over $40 billion to its market value.

As a 46-year-old database giant, Oracle has been strategically transitioning itself into a cloud-computing provider, aiming to offer services at competitive prices compared to rivals like Amazon.com. 

It has actively sought to boost demand for its subscription plans through partnerships with competitors such as Microsoft and leading AI chip provider Nvidia.

CEO Safra Catz highlighted the major demand for Oracle's Gen2 AI infrastructure, which far exceeds supply. 

Oracle executives underscored their collaboration with Nvidia, hinting at an upcoming joint announcement in the following week.

Despite reporting a profit of $1.41 per share for the third quarter, a 16 per cent increase exceeding estimates, Oracle's revenue of $13.28 billion fell slightly below analysts' expectations. 

However, the company's Remaining Performance Obligations, a key indicator of booked revenue, surged by 29 per cent year-over-year, indicating positive future results.

Oracle's forecast for revenue growth in the current quarter, estimated to be in the range of 4 per cent-6 per cent, fell slightly below analysts' average estimates of about 6.5 per cent. 

Therefore, investors remain optimistic about the company's performance, especially given its success in securing new business during the quarter.

The surge in Oracle's shares and its strong performance in the AI sector signal a promising trajectory for the company, driven by growing demand for cloud-based solutions and AI technologies.

(With Reuters Inputs)