Oracle's stock price went up dramatically due to an extraordinarily bullish outlook on its cloud infrastructure business, especially fueled by strong demand for AI-capable cloud services. Key reasons include:
- Oracle raised its full-year growth forecast for its Cloud Infrastructure division, projecting a 77% revenue increase to about $18 billion for the current fiscal year, and expects it to rise further to $144 billion by 2030.
- The company announced four multibillion-dollar contracts in the quarter, including a major deal with OpenAI, signaling its growing role as a critical AI infrastructure backbone.
- Oracle's backlog of contracted but not yet recognized revenue ballooned to approximately $455 billion, up 359% year over year, reflecting massive future revenue potential.
- Despite recent earnings and revenue slightly missing expectations, the huge backlog and optimistic forecast overshadowed those concerns and excited investors.
- The stock's gain marked Oracle’s largest single-day increase since 1992, pushing its market value close to $1 trillion and making chairman Larry Ellison the world's richest person temporarily.
- Analysts from major banks have raised price targets and expressed optimism that Oracle’s AI and cloud infrastructure growth story is just beginning.
In summary, Oracle's stock surged mainly because investors are betting on its transformation into a leading AI cloud provider with rapidly growing, multi- billion-dollar contracts and a huge backlog that points to strong future revenue growth driven by AI demand.