Oracle’s stock moves higher on surging cloud infrastructure revenue growth
Oracle Corp. comfortably beat first-quarter expectations today, driven by strong growth in its cloud infrastructure business, and that boosted its stock by about 4% in late trading. The database giant reported earnings before certain costs such as stock compensation of $1.92 per share. That was a lot better than expected, as Wall Street analysts were […] The post Oracle’s stock moves higher on…
Oracle's stock rose on Thursday after the tech giant reported strong first-quarter earnings that surpassed expectations. The company's cloud infrastructure business, which rents out AI servers to enterprise clients, drove the growth, with sales up 121% year-over-year. Revenue for the period increased by almost 30% to $19.35 billion, beating analysts' estimates.
Despite the positive news, Oracle still carries a significant debt pile of $125 billion and reported a negative free cash flow of $5.4 billion. The company, which has heavily invested in data centers, aims to capitalize on the growing demand for cloud services. Oracle's backlog of contracts, mostly tied to the AI startup OpenAI, now stands at $664 billion, with nearly half of that coming from a single cloud infrastructure deal with OpenAI.
However, sentiment around OpenAI has cooled in recent months, leading to a 22% drop in Oracle's stock price year-to-date. Despite this, the company's backlog has more than doubled in the past year, providing reassurance to investors. Analysts are optimistic about Oracle's data center buildout and its ability to generate revenue and higher margins, but caution remains due to the company's mounting debt and cash flow issues.
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