By Zaheer Kachwala
(Reuters) -Oracle on Tuesday forecast revenue for fiscal 2025 to grow in double digits, above analysts’ estimates, indicating strong demand for its AI-powered cloud services, sending the company’s shares up 9% after the bell.
The company also announced a partnership with ChatGPT-maker OpenAI and Google (NASDAQ:) Cloud to extend its own cloud infrastructure to customers.
“I expect that each successive quarter should grow faster than the previous quarter — as OCI (Oracle (NYSE:) Cloud Infrastructure) capacity begins to catch up with demand,” CEO Safra Catz said.
“In Q4 alone, Oracle signed over 30 AI sales contracts totaling more than $src2.5 billion, including one with OpenAI to train ChatGPT in Oracle Cloud.”
AI investments play a crucial role in Oracle’s efforts to catch up with cloud giants such as Microsoft (NASDAQ:), which is seeing rapid growth of its own Azure cloud due to its tie-up with OpenAI.
Oracle has also spent billions of dollars on hardware from chip giant Nvidia (NASDAQ:).
The company’s total revenue grew 3% to $src4.29 billion in the fourth quarter, but missed LSEG estimates of $src4.55 billion.
“In the cloud market, Oracle is doing well as the fourth-largest provider, but that business has to grow far bigger to help overall growth achieve double digits,” said Gil Luria, research analyst at D.A. Davidson.
Oracle reported total revenue growth of 6% for fiscal 2024. For FY25, analysts expect 9% growth.
The company expects first-quarter revenue to grow between 5% and 7%, while analysts estimate a 7.6% rise.
“In Q3 and Q4, Oracle signed the largest sales contracts in our history, driven by enormous demand for training AI large language models in Oracle Cloud,” Catz said.
Remaining performance obligations — the most popular measure of booked revenue — came at $98 billion in the fourth quarter, up 44% from a year ago.
It posted adjusted earnings per share of $src.63 per share, compared with estimates of $src.65 per share.