Shares of Oracle (ORCL 2.02%) were up 11.7% this week, according to data provided by S&P Global Market Intelligence, after the enterprise database leader announced strong quarterly results on Monday.
On Oracle's cloud infrastructure success
For its fiscal third quarter of 2024 ended Feb. 29, 2024, Oracle's revenue grew 7% year over year to $13.28 billion, translating to a 16% increase in adjusted (non-GAAP) net income to $1.41 per share. Analysts, on average, were expecting earnings of only $1.38 per share on roughly the same revenue.
Within its total top line, Oracle's cloud revenue grew 25% year over year to $5.1 billion, while cloud infrastructure revenue soared 49% to $1.8 billion. Oracle CEO Safra Catz credited multiple large new cloud infrastructure contracts for helping drive remaining performance obligations (RPO) up 29% year over year to a fresh company record of more than $80 billion.
What's next for Oracle stock?
Catz added that demand for Oracle's Gen2 AI infrastructure significantly exceeds supply, even as the company is "very, very rapidly" opening new datacenters and expanding existing facilities. As such, Oracle believes its Gen2 Cloud infrastructure business will "remain in a hypergrowth phase" for the foreseeable future.
Of course, that segment is still a reasonably small fraction of Oracle's overall sales as it stands. But with what appears to be a years-long runway for those outsized growth rates to persist, it seems Oracle is perfectly positioned to capitalize on growth in cloud and AI solutions. Its stock simply responded in kind this week.
