Oracle's Versatility Conquers New Collaborations
Oracle's brilliant spurt in the middle of this week led its share price exactly to the levels we described three months ago as an averagely updated target by half a dozen investment houses on Wall Street. Thus, a widely expected landmark at $135.50 has been achieved to follow a one-day 9% jump in the market value of the U.S. second largest computer software developer (after Microsoft) in terms of annual revenue. It was a clear response to the public announcement of a cooperative efforts by Microsoft and ChatGPT creative team of OpenAI on improving Microsoft's Azure cloud platform by integrating it with Oracle's OCI infrastructure, all based on generative artificial intelligence (AI) features. Oracle said on Tuesday, June 11, it also established a closer and new partnership deal with Google's cloud development program, including building 12 data centres inside the Google Cloud to be available as soon as in September.
These collaborations promise to enhance capacities for OpenAI, and therefore for its closest Microsoft partner, this also gave additional momentum to the price of Microsoft shares. Open AI services are used by over 100 million subscribers. Its CEO, Sam Altman, expressed enthusiasm for the big partnership, highlighting "the scalability benefits" that Oracle's OCI would bring to Microsoft's Azure to make further growth easier. Oracle's Larry Ellison commented on the high demand for its "world's fastest and most cost-effective AI infrastructure". By the way, Elon Musk's xAI, which is standing along and keeping distance from AI features of other tech giants, also admitted it is using Oracle's OCI supercluster for training and inference of next-generation AI models.
Thus, the level of Oracle's versatility just rolls over. It can be scaled up to the newest 64k Blackwell GPUs (graphic processing units) produced by NVidia or to its GB200 Grace Blackwell Superchips, which is perfect for huge projects. It also allows small enterprises and startups to build their own separate, simply organized, cheap and reliable train models within Oracle's distributed cloud environment. The news offset Oracle's quarterly results at the same night, which slightly missed expert consensus estimates. The company showed equity per share (EPS) of $1.63 on revenue of $14.29 billion, compared to a predicted EPS of $1.65 on revenue of $14.6 billion.
With a P/E ratio (a profitability factor) of nearly 32, Oracle mirrors the crowd's great confidence in its ability to expand its strong market presence. Besides, Oracle's remaining performance obligations, which may be considered as a pre-booked revenue, climbed by 44% to approach $100 billion. This number of its sales backlog was about 30% after the Christmas quarter report in mid-March, when we concluded Wall Street bulls were not going to rest until testing the range between $145 and $150. Therefore, our target for the future all-time highs update could be raised to $170 at least.
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