Oracle surges as AI demand helps reignite cloud business momentum – Yahoo Finance

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(Reuters) — Oracle sharse soared 13% on Tuesday, on signs the firm was making progress in its plan to grab a share of the cloud-computing market thanks to its tie-up with AI chip giant Nvidia.

The database megacorp also teased joint announcements with Nvidia coming up next week, which could be made at the chip firm’s GTC developer conference that runs from March 18 to 21.

The company has pitched itself as a low-cost cloud provider and spent billions of dollars on Nvidia chips as it looks to compete with industry heavyweights Amazon.com and Microsoft.

Those efforts, as well as a partnership that gives its cloud customers access to Nvidia supercomputers, helped Oracle post a 25% jump in cloud revenue for the third quarter, while its remaining performance obligations, or sales backlog, rose 29%.

“Oracle Cloud momentum is back on track after witnessing disappointing cloud results in the prior two quarters,” analysts at Piper Sandler said in a client note.

The company was on track to adding nearly $40 billion to its market value, based on its premarket share price of $129.67.

At least 14 analysts raised their price targets on the stock, pushing the median view to $135.50. Oracle trades at 19 times its 12-month forward earnings estimates, compared with 31.2 for the software and IT services sector, per LSEG data.

Its shares underperformed big cloud rivals such as Microsoft in 2023 and thus far this year, on worries that data center capacity constraints and an uncertain economic outlook were weighing on the company’s growth.

NEW YORK, NEW YORK - JULY 12: Oracle Corp. CEO Safra Catz  walks on the floor of the New York Stock Exchange (NYSE) as Oracle rang the Opening Bell in celebration of its 10th anniversary of listing on the NYSE on July 12, 2023 in New York City. New government data released Wednesday showed that inflation fell to 3% in June in the United States— the 12th-consecutive month of declines. (Photo by Spencer Platt/Getty Images)NEW YORK, NEW YORK - JULY 12: Oracle Corp. CEO Safra Catz  walks on the floor of the New York Stock Exchange (NYSE) as Oracle rang the Opening Bell in celebration of its 10th anniversary of listing on the NYSE on July 12, 2023 in New York City. New government data released Wednesday showed that inflation fell to 3% in June in the United States— the 12th-consecutive month of declines. (Photo by Spencer Platt/Getty Images)

Oracle CEO Safra Catz at the NYSE in July. (Spencer Platt/Getty Images) (Spencer Platt via Getty Images)

CEO Safra Catz dispelled some of those concerns on Monday, saying Oracle “signed several large deals this quarter, and we have many more in the pipeline”.

(Reporting by Aditya Soni in Bengaluru; Editing by Pooja Desai)

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