Oracle Corporation, NYSE: ORCL has, throughout the years, been one of its class-leading technology companies in its ability to evolve with the tide of innovation. From its workbench that birthed the first commercial database application software to the new frontier of AI, it once more changes the face of technology again. By December 2024, Oracle Corporation should declare its fiscal 2025 Q1. This will help investors understand how the trend is turning out for this company. At the center of all this noise is Oracle Cloud Infrastructure, which has become an all-important aspect of the company’s growth story.
It then proceeds to outline some of the key numbers investors will be looking for, Oracle’s leadership in AI infrastructure, and how all of this fits into broader implications for the performance of the stock of the company.
Oracle’s Contribution to AI and Data Centers
Oracle will nudge artificial intelligence to usher in a new era for data centers. Advanced models of AI require tremendous computational power to support both training and inference. This is all placed within data centers, which are the most dependent on advanced technologies that include GPUs and efficient networking systems.
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Oracle is the story of successful automation.
The company has designed its data centers totally in a software-based manner without human interference. This brings low operating expenses; hence the company is very fast at setting up new facilities.
There was no such huge demand previously for OCI services.
Demand for Oracle’s OCI services is shooting into orbit. In the fiscal Q1 2025 end, Oracle reported having 162 operational and under-construction data centers. Still, demand exceeds supply, forcing Oracle to chase a long-term plan to build between 1,000 and 2,000 data centers globally.
A Record Year for OCI
In Q1 of fiscal, OCI accounted for revenue of $2.2 billion, growing by 45% YoY. Growth there has surged compared with prior quarters and reflects the significant growing value that OCI is securing for Oracle’s general business moves.
The company has lofty ambitions for OCI, as executives frequently cite the notion of achieving some form of at least 50% revenue growth on a fairly consistent basis. It has not yet occurred, but demand, not supply, has been to date the primary limiting factor.
Key Critical Numbers to Watch in Oracle Fiscal 2025 Q1 Earnings
There are many things to take from Oracle’s fiscal 2025 Q1 earnings, but two numbers in particular to focus on are: OCI revenue and RPOs.
Revenue Growth
OCI revenues of $2.2 billion into Q1 indicate strong demand, but whether Oracle can accelerate the scaling of the operations to make it possible to attain that 50% growth target in any future quarter remains to be seen. The number may well become Oracle’s near-term litmus test.
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RPO Growth
Oracle’s RPOs, which can be described as an order backlog, were at an all-time high of $99 billion in Q1 with year-over-year growth of 53%. The healthy growth does point towards a huge appetite for Oracle’s data center services. Oracle signed 42 contracts for GPU computing capacity in Q1 worth $3 billion.
Scaling Challenges and Opportunities
Even with technological supremacy, Oracle still faces a challenge at the scale of operation of its data center. Just how fast it constructs to close the gap against the demand by resource availability remains to be known. The investors will do well by being attuned to receive updates concerning the growth in the data center during the December call.
Oracle’s Stock in 2024
Oracle has been an outlier so far in 2024, with the stock gaining 72% year to date and now at an all-time high. Current P/E of 47 puts Oracle at a 48% premium as compared to the average P/E of the Nasdaq-100 of 32.
The future of Oracle in AI
With leadership in AI infrastructure, growth at Oracle is likely to be sustained. Its automated data centers and superior networking technology bring a huge competitive advantage.
It is OCI that Oracle needs to continue to catch up on the way to keeping long-term prospects bright as long as it can keep up with demand.
Conclusion: A Critical December for Oracle
December 2024 will also be a significant month for Oracle: in fiscal Q1, investors will eagerly await growth in revenue in OCI and figures in RPO-it is going to be critical indices by which its performance to tap growing demand for AI infrastructure is measured.
Though the stock may be costlier in the short term, there is an underlying long-term prospect in Oracle’s stock. The investments done by the company in AI and data centers would bring long-term gains to the investors.
The journey of Oracle in 2024 marks the strength and resourcefulness of the company as a company.
