Oracle’s $664 billion backlog sends a signal to Dell, HPE

Dell Technologies and Hewlett Packard Enterprise were at the top of the S&P 500 due to Oracle's reminder of the significant funds flowing into AI infrastructure. Dell's stock rose 12% on September 11, while HPE also performed well. Oracle's strong first-quarter results, with a 30% revenue increase to $19.3 billion and a 121% surge in cloud infrastructure revenue to $7.4 billion, showed the demand for AI data center hardware.

Oracle's remaining performance obligations grew to a substantial $664 billion, indicating potential benefits for Dell and HPE. However, the AI boom is also causing companies to focus on borrowing costs and Federal Reserve actions. Oracle increased data center capacity by 850 megawatts and provided over 300,000 GPUs to AI cloud clients.

It secured more than $30 billion in new contracts for AI-related cloud services. Dell reported record fiscal second-quarter revenue of $47 billion, up 58% year-over-year, and booked $60.9 billion in AI server orders. HPE also showed strong results, with record fiscal third-quarter revenue of $12.2 billion, up 34%, and growing server revenue.

Both companies are benefitting from AI infrastructure demand, but they will need significant capital to sustain the cycle of spending. The $664 billion backlog at Oracle indicates the vast potential, but financing needs could eventually hinder the growth.