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Oracle Cloud Orders Near $500 Billion, Shares Jump 27%

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Oracle (ORCL.N) announced Tuesday that it expects its booked revenue in cloud infrastructure to surpass half a trillion dollars, sending shares soaring 27% after hours. The surge reflects rising demand for its low-cost AI cloud infrastructure and strong multi-cloud partnerships.

Key Highlights

  • Booked Revenue (RPO): Jumped 359% year-on-year to $455 billion in Q1 (ending August 31).

  • Future Growth: CEO Safra Catz said upcoming multi-billion-dollar deals are expected to push RPO beyond $500 billion.

  • Revenue Forecast: Oracle projects 77% growth in OCI revenue this fiscal year to $18B, rising to $144B over the next 4 years.

  • AI Integration: Customers can now directly connect databases to ChatGPT, Gemini, and Grok via Oracle Cloud.

  • MultiCloud Strategy: Partnerships with Amazon, Google, and Microsoft drove a 1,529% increase in first-quarter multi-cloud revenue. Oracle plans 37 new datacenters, bringing the total to 71 with hyperscaler partners.

Market Impact

  • Shares: Up 45% YTD, boosted further by the after-hours spike.

  • Contracts: Four multi-billion-dollar deals with three customers supported overall Q1 revenue growth of 12% to $14.93B.

  • Q2 Guidance: Total revenue expected to rise 12–14%, with cloud revenue growing 32–36%.

Analyst Views

  • Analysts see Oracle emerging as a key AI cloud player, despite being smaller than hyperscaler rivals.

  • “Oracle is not just keeping up but actually leading the way in the cloud space,” said Melissa Otto, S&P Global Visible Alpha.

  • Jacob Bourne, eMarketer: “Enterprises are clearly eager for cost-effective AI cloud tools, and Oracle is positioning itself to capture that demand.”

OpenAI’s Cash Burn Projected to Hit $115B by 2029 Amid Chip, Data Center Push

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OpenAI has revised its financial outlook sharply upward, projecting it will burn through $115 billion by 2029, according to The Information. The new figure is about $80 billion higher than its earlier estimate, reflecting the surging costs of powering ChatGPT and other AI models.

The report says OpenAI expects to lose over $8 billion in 2024 alone, roughly $1.5 billion more than forecast earlier this year. The company anticipates that annual burn will balloon to $17 billion next year, rising to $35 billion in 2027 and $45 billion in 2028.

To rein in costs, OpenAI is pursuing vertical integration—developing its own AI server chips and data center infrastructure. Its first in-house chip, being developed in partnership with Broadcom, is expected in 2025 and will be used internally. On the infrastructure side, OpenAI has struck major agreements, including:

  • A $4.5 GW data center expansion with Oracle announced in July.

  • The Stargate project, a planned $500 billion, 10 GW buildout backed by SoftBank.

  • Expanded computing capacity through Google Cloud.

The staggering burn rate underscores the immense capital intensity of generative AI, where costs for cloud computing, GPUs, and electricity are skyrocketing. At the same time, it highlights OpenAI’s strategy to reduce reliance on external providers like Nvidia and Amazon Web Services by building a proprietary AI stack—from chips to data centers.

Oracle and Google Cloud Partner to Offer Gemini AI Models via Oracle Cloud

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Oracle (ORCL.N) and Alphabet (GOOGL.O) announced on Thursday that their cloud computing divisions have reached an agreement to make Google’s Gemini artificial intelligence models available through Oracle’s cloud services and business applications. The collaboration allows developers to leverage Google’s models for generating text, video, images, and audio.

The deal extends to businesses using Oracle applications for corporate finance, human resources, and supply chain management, enabling them to integrate Google’s AI capabilities directly into these tools. While the AI models will run on Google’s servers, Oracle will integrate access through Google’s Vertex AI platform, allowing customers to use Oracle cloud credits to pay for the services. Financial terms between the companies were not disclosed.

This partnership follows a similar arrangement Oracle made with Elon Musk’s xAI in June and aligns with Oracle’s strategy to offer customers multiple AI options instead of focusing solely on its own technology. For Google, the collaboration broadens the reach of its cloud services and aims to attract corporate clients from competitors like Microsoft (MSFT.O).