Oracle rises 36% in a single day based on massive incoming revenue from OpenAI

Oracle finished Wednesday up 36% after the company forecast that it expects its cloud infrastructure business to see revenues climb to $144 billion by 2030. As hockey-stick revenue projections go, that’s about as bold as they come in terms of sheer scale.

Not a household name like Google, Apple, or Amazon, Oracle has a swath of different specialties, providing software, servers, and cloud services to global businesses.

The insane revenue backlog that Oracle revealed, which was up 359% to $455 billion, was enough to lift the entire AI space.

That figure is a closely followed measure of the company’s “booked” revenue, known as “remaining performance obligations,” or RPO. Essentially, it’s legally binding IOUs that reflect sales Oracle expects to go through.

OpenAI reportedly signed a massive five-year deal to purchase $300 billion worth of cloud computing capacity from Oracle, which The Wall Street Journal noted would be one of the largest cloud computing contracts ever signed, requiring 4.5 gigawatts of capacity.

Most of Oracle’s RPO won’t turn into real revenue for quite a bit. In its annual report in June, the company said two-thirds of its then $137.8 billion RPO wouldn’t be recognized as revenue for at least 12 months.

The Takeaway

The entire AI trade was uplifted on Oracle’s good fortune, and that makes sense. In a way, this is just the first of many times we’ll be seeing these dollars in the years to come. First they’ll go from OpenAI to Oracle, and then into the rest of the AI business. Oracle also has to build out its infrastructure to meet that contracted demand, and that race is reflected in the hefty $35 billion in capital spending it’s allocated for this fiscal year. Oracle’s CEO said she expects RPO to grow to more than $500 billion in the fiscal year as the company signs more multibillion-dollar cloud deals.