Oracle stock extends its rally. Earnings got a boost from artificial intelligence.

For the fiscal fourth quarter ended May 31, Oracle reported revenue of $13.8 billion, up 17% as reported and 18% in constant currency. Oracle forecasts growth of 17% to 19% currency-adjusted. Non-GAAP earnings were $1.67 a share, ten cents higher than the Wall Street consensus.

The results were driven by a 54% growth in cloud-related revenue, or 55% in constant currency, much higher than Street’s estimate of around 50%. Under generally accepted accounting practices, Oracle earned $1.19 per share. Oracle noted that unfavorable exchange rates reduced non-GAAP earnings by three cents per share.

Oracle said its cloud infrastructure business in the quarter generated $1.4 billion in revenue, up 76% as reported or 77% adjusted for currency. Cloud application revenue reached $3 billion, up 45% or 47% for FX adjustment.

For the full fiscal year, Oracle reported $50 billion in revenue, an all-time high, up 18% as reported or 22% in constant currency. The company said its cloud aggregate business is up 50% for the year in constant currency. Oracle has indicated that its cloud infrastructure business in particular is accelerating.

Oracle said it recently signed more than 30 AI development companies, and together they committed to purchasing more than $2 billion of capacity in Oracle’s Gen 2 cloud. In particular, Oracle founder Larry Ellison noted that the company has a new partnership with artificial intelligence software company Cohere to help customers build their own models while protecting their data.

For the fiscal first quarter ending in August, the company sees revenue rising 8% to 10% — just ahead of forecasts of 7.6% growth and 7% to 9% in constant currency. The company sees $1.12 to $1.16 a share in earnings this quarter, in line with estimates of $1.14. The company expected cloud-based revenue for the quarter excluding Cerner, a hospital and healthcare systems provider, to rise 28% to 30%, which could be slightly less than Oracle customers were expecting.

CEO Safra Katz said on the call that her early read for fiscal 2024 calls for “unprecedented cloud demand,” with cloud demand growing at at least the same rate in 2023, “although the base is much higher.”

Katz added, “We’re in the middle of starting.” She said the company remains committed to its previous forecast of $65 billion in sales by 2026. “The demand for AI leaves us with a huge uptick,” she said.

Oracle shares have been flying in recent weeks amid a growing view that the company’s cloud business is well positioned to take advantage of the growing artificial intelligence trend. The stock is trading at an all-time high, today breaking through the $300 billion market valuation level. Oracle shares have risen more than 30 percent since March.

What has changed, for the most part, is Oracle’s aggressive push into the cloud, first with its own software and then the launch of Oracle Cloud, eg Barron It was referenced in a February 2021 cover story and repeated in a story last October that included an interview with CEO Safra Katz. Since then, the stock has risen 70%.

“Customers who compare us to other clouds are often dumbfounded,” Katz said at the time. Why all these car companies – Toyota and Nissan
And

Mazda – Why do they do all of their high-performance work in Oracle Cloud? Is it our charming bedside style? Mostly not. Is it because it’s faster, cheaper and safer? Ding ding ding!”

Oracle is also leveraging strong customer relationships, a well-developed cloud platform, and close relationship with Nvidia (NVDA), which provides chips for nearly every cloud vendor, to become a surprisingly attractive AI game. Oracle said today that Nvidia itself uses a cluster with more than 4,000 GPUs.

Write to Eric J. Savitz at [email protected]