(Reuters) – Oracle said on Monday it plans to make a joint announcement with semiconductor giant Nvidia after the company reported better-than-expected quarterly profits amid a boom in demand for generative AI.
The database giant’s stock rose nearly 13% in premarket trading Tuesday. The rise in Oracle stock added about $40 billion to the company’s stock market value.
The 46-year-old database giant has sought to reinvent itself as a cloud computing provider by offering cheaper services than competitors such as Amazon.com.
The company is trying to drum up demand for its subscription plans through partnerships with rival Microsoft and AI chip giant Nvidia, which makes chips that power supercomputers and can be used by customers of Oracle’s cloud services.
CEO Safra Katz said, “Despite the fact that we are opening new cloud data centers and expanding existing cloud data centers at a very rapid pace, demand for our second-generation AI infrastructure continues to grow. “We expect we will continue to receive large contracts to reserve capacity on our cloud infrastructure as we significantly exceed supply.”
Oracle executives mentioned Nvidia at least three times on conference calls with analysts and said a joint announcement would be made within the next week.
Excluding items, the company’s third-quarter earnings rose 16% to $1.41 per share, beating LSEG’s estimate of $1.38 per share.
“While the quarter’s results were simply in line with expectations…investors are excited about the new business Oracle acquired during the quarter,” said Gil Luria, research analyst at DA Davidson.
Mr. Luria said remaining performance obligations, the most common measure of recorded revenue, were up 29% year over year, which bodes well for future results.
However, sales for the three months ended February 29 were $13.28 billion, lower than analysts’ average estimate of $13.3 billion.
Oracle expects revenue growth in the range of 4% to 6% for the current quarter, below the average analyst estimate of about 6.5%, according to LSEG data.
(Reporting by Harshita Mary Varghese in Bangalore; Editing by Krishna Chandra Eluri)
