When it comes to AI stocks, most investors are fixated on chipmakers like $NVIDIA Corp(NVDA)$ and $Advanced Micro Devices(AMD)$ . But guess what? Some old-school companies are also getting a second wind from AI!
Take $Oracle(ORCL)$ , the database software giant, for instance.
The company announced their fiscal Q3 2024 earnings (covering the period ending February 28th) yesterday, and while revenues and profits were slightly ahead of expectations, their stock price skyrocketed 13% pre-market!
Crazy, isn't it? But the reason for this madness is AI. It's poised to catapult Oracle into a high-growth trajectory. In their Q3 report, cloud business revenues jumped 25% to $5.1 billion, of which $1.8 billion came from computing and storage rental business, and $3.3 billion came from applications:
And that's not all. Oracle's remaining performance obligations hit $80 billion, up 28.4% from a year ago, well above the $59 billion expected by analysts:
CEO Safra Catz attributed this to "large new cloud infrastructure contracts signed in the third quarter," proof of the momentum among customers. She expects to continue receiving large-scale contracts for pre-booked cloud infrastructure capacity, and Oracle is "rapidly" opening new cloud data centers to meet the demand.
During the earnings call, executives mentioned Nvidia multiple times and said they'll release a joint statement within the coming week.
Safra Catz even believes their sales target of $65 billion for fiscal 2026 might be too conservative!
So, it looks like AI is about to give Oracle a new wave of growth!
Before the AI explosion, Oracle's earnings were stagnant for years. Their revenue in fiscal 2012 was $37.1 billion, and by the 2022 fiscal year, the company's revenue was $42.4 billion, and the growth was very weak.
If it weren't for their acquisition of Cerner, a leading electronic health record software company in June 2022, they might not have hit the $50 billion mark in fiscal 2023.
The sluggish growth was mainly due to waning database demand, but the company is aggressively transition towards cloud computing with Oracle Cloud. It allows users to deploy and manage their apps and data flexibly. Plus, Oracle Cloud offers secure and reliable computing and storage resources, enabling businesses to achieve high availability and resilient scaling.
Meanwhile, Oracle is also actively exploring and developing AI technologies. They're committed to applying AI to database management and analysis, improving data processing efficiency and accuracy through automation and intelligence.
Now, with the explosive demand for AI, Oracle is finally shedding its old skin and embracing a new wave of growth!
And Oracle isn't the only giant getting a makeover from AI. $Dell Technologies Inc.(DELL)$ is also shining bright under its spell.
After disclosing their earnings in early March, Dell's stock price surged 31.6% in a single day! But surprisingly, their revenue actually dipped 10.9% that quarter.
So what's the catch? AI, of course! Dell's COO, Jeff Clarke, revealed that "AI-optimized server demand continues to grow, with order volume nearly doubling sequentially, and backlog nearly doubling to $2.9 billion at the end of our fiscal year."
Not just servers, but Dell's core PC business is also expected to benefit from AI. Giants like $Qualcomm(QCOM)$ $Intel(INTC)$ $Lenovo Group Ltd.(LNVGF)$ $LENOVO GROUP(00992)$ are all predicting that AI-powered PCs will drive up shipments.
Looking at Oracle and Dell, it's clear that AI's impact isn't limited to GPU shovel-sellers like Nvidia. Downstream customers are also seeing booming growth. And it's only going to spread further.
These seemingly traditional companies are getting a fresh lease on life with AI!
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