Oracle Stock Pops On Historic Gain From Cloud Demand, Flirts With $1 Trillion Market Cap
Oracle's share price skyrocketed 36% in after market trading hours after the company outlined what it acurately deemed an "astonishing quarter" in its latest earnings report. The impressive quarter stunned Wall Street by disclosing that its remaining performance obligations (RPO) shot up 359% year-over-year in both USD and constant currency to $455 billion.
RPO refers to contracted revenue from upcoming products and services and points to future earnings. Based in part on that figure, Oracle reckons its Oracle Cloud Infrastructure (OCI) will balloon 77% to $18 billion this fiscal year, followed by giant, steady increases to $32 billion, $73 billion, $114 billion, and $144 billion over a subsequent four-year period.
"We signed four multi-billion-dollar contracts with three different customers in Q1," said Oracle CEO, Safra Catz. "This resulted in RPO contract backlog increasing 359% to $455 billion. It was an astonishing quarter—and demand for Oracle Cloud Infrastructure continues to build. Over the next few months, we expect to sign-up several additional multi-billion-dollar customers and RPO is likely to exceed half-a-trillion dollars."
We're used to seeing record quarters and explosive growth, though it usually applies to NVIDIA on dominating AI chip sales, and sometimes AMD on the strength of its overall product portfolio. Oracle is also benefiting from an industry-wide focus on AI.
To that end, Oracle Chairman and CTO Larry Ellison revealed another staggering figure.
"MultiCloud database revenue from Amazon, Google and Microsoft grew at the incredible rate of 1,529% in Q1," said Oracle Chairman and CTO, Larry Ellison. "We expect MultiCloud revenue to grow substantially every quarter for several years as we deliver another 37 datacenters to our three Hyperscaler partners, for a total of 71."
In addition, Ellison said Oracle is getting ready to introduce a new cloud infrastructure service called Oracle AI Database at next month's Oracle AI World event, which will enable customers to use a large language model (LLM) of their choice, including Google's Gemini, OpenAI's ChatGPT, and xAI's Grok, among other options.
In a sense, AI is the rising tide that's lifting all ships, or at least the ones that find themselves sailing in those waters. Oracle is the latest example after seeing its share price notch its biggest gain since 1992.
Oracle also looks poised to become the newest member of the $1 trillion market cap fraternity, joining heavyweights like Alphabet/Google ($2.89 trillion), Apple ($3,37 trillion), NVIDIA ($4.31 trillion), TSMC ($1.06 trillion) and select few others. It's current market cap sits at over $922 billion, though if its cloud business continues to expand as expected and outlined in its earnings report, it may not be long before it hits and exceeds $1 trillion.
