Oracle stock jumped 13% to about $129 during after-hours trading on Monday following the company’s latest quarterly earning report that showed strong demand for the company’s cloud services.
“We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply,” Oracle CEO Safra Catz said in a statement (pdf). “Despite the fact we are opening new and expanding existing cloud data centers very, very rapidly.”
Oracle can’t expand its data centers fast enough to keep up with AI-driven demand
Catz added that Oracle’s cloud infrastructure business was up 53% in the third quarter and that it will remain in a “hypergrowth phase” for the foreseeable future.
Although Oracle only represents less than 5% of the global cloud market, it has recently pitched itself as a more affordable alternative to its rivals: Amazon, Microsoft, and Alphabet.
The company’s cloud services generated 75% of its revenue in the third quarter, about $9.9 billion.
To meet demand driven by the rise in generative AI, Oracle’s chairman and chief technology officer Larry Ellison said the company is building the world’s largest database centers.
“We’re building an AI data center in the United States, where you could park eight Boeing 747s nose to tail in that one data center,” Ellison told investors on a call on Monday.
Oracle’s third quarter, by the digits
Overall, Oracle’s net income soared 27% in the three months ending Feb. 29 to nearly $2.4 billion from about $1.9 billion in the same period the prior year.
The company’s total revenue in the quarter jumped 7% to $13.3 billion, from $12.4 billion.
Its earnings per share came to $1.41, above Wall Street expectations of $1.38, according to a consensus estimate from analysts surveyed by FactSet.