Oracle Corp (NYSE: ORCL) stock experienced a pre-market surge of 13.64% upon the releasing the third quarter results for 2024, hinting at a partnership with industry giant Nvidia (NASDAQ: NVDA).
In the third quarter of the 2024 fiscal year, Oracle reported strong financial performance, with revenue reaching $13.3 billion, slightly above analyst expectations, and showing a 7% year-over-year increase.
Additionally, Oracle’s remaining performance obligations, representing the value of ordered products yet to be delivered, reached a record high of $80 billion, driven by significant new cloud infrastructure contracts signed during the quarter.
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Why is the partnership between ORCL and NVDA a good thing?
Oracle is renowned for its legacy database business, which is a fundamental IT component for major enterprises worldwide. Over the past five decades, it has fostered a robust software development ecosystem.
Oracle Cloud Infrastructure supports developers in creating powerful applications for various environments. A recent strategic partnership with Nvidia aims to enhance Oracle’s AI capabilities and offer enterprises high-performance services, solidifying its industry position.
The collaboration with Nvidia will strengthen Oracle’s connection to it, potentially allowing gains, profits, and positive developments of Nvidia to influence ORCL stock. Currently priced at only one-eighth of NVDA’s, investing in ORCL offers traders the opportunity to benefit from the tech giant’s success without direct investment.
In addition to Nvidia Corporation, Oracle has a growing customer base, with McDonald’s (NYSE: MCD), Walmart (NYSE: WMT), and Uber (NYSE: UBER) being the most prominent ones.
AI will further bolster ORCL stock
CEO Safra Catz stated that Oracle anticipates ongoing receipt of substantial contracts for cloud infrastructure due to high demand for their Gen2 AI infrastructure, which surpasses supply.
Despite the rapid expansion of cloud data centers, demand continues to outpace capacity. Catz further noted that approximately 43% of the $80 billion backlog will be converted into revenue over the next four quarters.
When demand exceeds supply, prices typically increase, which holds for Oracle cloud solutions. This bodes well for the future of ORCL stock, indicating a promising outlook ahead.
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