Shares of CoreWeave (CRWV +10.87%) were climbing today in sympathy with Oracle (ORCL +0.08%), which posted better-than-expected results in its fiscal third-quarter earnings report last night, showing demand for AI compute was strong.
That was good news for neocloud peers like CoreWeave and Nebius, which depend on the same demand and industry-level trends.
CoreWeave stock closed up 9.4% on the news, while Oracle stock jumped 9.2%.
Image source: Getty Images.
Good news for Oracle is good news for CoreWeave
Investors had their doubts about Oracle coming into the report, as the stock had fallen more than 50% from its earlier peak, a sign that the euphoria for these AI data center stocks might have been overdone.
However, Oracle delivered strong results, reporting 84% growth in cloud infrastructure to $4.9 billion, and remaining performance obligations (RPO), a proxy for backlog, was up 325% from a year ago to $553 billion, reflecting the megadeals it's made with the likes of OpenAI.
Overall revenue of $17.2 billion was up 22% from the year before and beat estimates at $16.9 billion. On the bottom line, adjusted earnings per share rose 21% to $1.79, well ahead of the consensus at $1.27.
NASDAQ: CRWV
Key Data Points
What it means for CoreWeave
CoreWeave operates under the same high-risk business model as Oracle's AI cloud infrastructure division. These companies are spending tens of billions building out AI data centers to sell computing power to hyperscalers and AI start-ups. It's a bold bet, and it's unclear whether it will pay off, as these companies are deep in the red on free cash flow.
That explains why CoreWeave stock has been so volatile. There's a lot of upside potential to the stock if the gamble works out, but the stock could also be a zero if the neocloud model never turns a profit.
After Oracle's update, there's more reason to be confident in CoreWeave's long-term success.
