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“Revitalized” Oracle Reaps an AI Dividend

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Secretary of State Michael R. Pompeo meets with the Oracle Leadership Team, in Redwood City, California on January 15, 2020. [State Department photo by Ron Przysucha/ Public Domain]

In The Wall Street Journal, Tom Dotan discusses the revitalization of Oracle, which “missed the tech industry’s move to cloud computing last decade and ended up an also-ran.” Dotan explains that the AI boom has given Oracle another shot, writing:

The 47-year-old company that made its name on relational database software has emerged as an attractive cloud-computing provider for AI developers such as OpenAI, sending its long-stagnant stock to new heights.

Oracle shares are up 34% since January, well outpacing the Nasdaq’s 14% rise and those of bigger competitors Microsoft, Amazon.com and Google.

It is a surprising revitalization for a company many in the tech industry had dismissed as a dinosaur of a bygone, precloud era. Oracle appears to be successfully making a case to investors that it has become a strong fourth-place player in a cloud market surging thanks to AI.

Its lateness to the game may have played to its advantage, as a number of its 162 data centers were built in recent years and are designed for the development of AI models, known as training.

In addition, Oracle isn’t developing its own large AI models that compete with potential clients.

The company is considered such a neutral and unthreatening player that it now has partnerships with Microsoft, Google and Amazon, all of which let Oracle’s databases run in their clouds. Microsoft is also running its Bing AI chatbot on Oracle’s servers.

Other big clients include xAI and Nvidia. Oracle co-founder and Chief Technology Officer Larry Ellison’s tight relationship with their respective chief executives, Elon Musk and Jensen Huang, helped seal those deals.

The company touted the benefits of a burgeoning AI business in its earnings Monday, posting cloud-infrastructure revenue that was up 45% from the same quarter last year. Its results beat expectations and, coupled with robust guidance, sent the stock up 9% in after-hours trading.

Ellison said on the call that building giant data centers is “something that Oracle has proven to be very good at. It’s the reason we’re doing so well in the AI training business.”

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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