(Reuters) – Oracle soared more than 13% to a record high on Tuesday on signs that its plans to grab a share of the cloud computing market through a partnership with AI chip giant Nvidia are making headway. did.
The database giant also hinted at a joint announcement with Nvidia scheduled for next week, which could be announced at the chip company's GTC developer conference, which runs from March 18th to 21st.
The company is pitching itself as a low-cost cloud provider and is spending billions of dollars on Nvidia chips to compete with industry giants Amazon.com and Microsoft.
These efforts, along with a partnership to provide cloud customers with access to Nvidia supercomputers, helped Oracle see a 25% increase in cloud revenue and a 29% increase in remaining performance obligations, or sales balances, in the third quarter.
“After seeing disappointing cloud performance over the past two quarters, Oracle Cloud momentum is back on track,” Piper Sandler analysts said in a note to clients.
The company was expected to add more than $40 billion to its market value, based on its $129.37 share price.
At least 14 analysts raised their price targets on the stock, with the median view being $135.50. Oracle trades at 19 times forward 12-month earnings, compared to 31.2 times earnings for its software and IT services division, according to LSEG data.
The company's stock price has lagged behind major cloud rivals such as Microsoft in 2023 and again this year, amid concerns that data center capacity constraints and an uncertain economic outlook are weighing on the company's growth.
CEO Safra Catz allayed some of those concerns on Monday, saying Oracle “has closed several large contracts this quarter and has many more on the way.”
(Reporting by Aditya Soni and Arshiya Bajwa in Bengaluru; Editing by Pooja Desai)
