ASML (ASML 0.40%) shares gained 5.2% through 11:40 a.m. ET Thursday, and investors can thank Oracle (ORCL 2.14%) for the good news.
Oracle "beat" on earnings last night, earning $2.11 per share on $19.2 billion in quarterly sales -- both numbers higher than analysts had expected. More important to ASML investors, though, is what Oracle revealed about its plans.
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What Oracle is up to in AI
Specifically, Oracle said it must raise another $20 billion through debt issuances and share sales. This is on top of $20 billion in share sales already announced... and $48 billion raised last year.
From Oracle's perspective, these cash raises are necessary to offset the $23.7 billion in cash the company is burning annually as it builds out data centers to support its hundreds of billions of dollars' worth of long-term contracts to supply artificial intelligence support to its AI clients -- a major worry for investors in Oracle stock.
NASDAQ: ASML
Key Data Points
What this means for ASML stock
From ASML's perspective, though, Oracle's bad news could be quite good. If Oracle is raising tens of billions of dollars, this logically means Oracle is also planning to spend tens of billions of dollars on AI chips for its data centers. As this money flows to Oracle's chip suppliers, it's furthermore logical to assume these chipmakers will turn around and spend much of this money on AI chip manufacturing equipment from ASML.
Long story short, the more Oracle spends, the more revenue and profit ASML can expect to collect -- and Oracle just told us it intends to spend quite a lot of money. This bodes well for ASML's chances of hitting analyst targets for 23% earnings growth over the next five years -- and that's a good reason for ASML stock going up today.
