ET Explainer: How Oracle became the new Nvidia amid AI cloud surge

On September 10, Oracle announced a series of multi-billion-dollar deals in AI cloud. This move led to a 36% surge in its shares, the largest one-day gain since 1992. Among them is a $300 billion, five-year deal with OpenAI, which is a part of an ongoing pipeline of deals involving major tech companies such as Nvidia, Softbank, and Meta.

The one-day surge was of such a magnitude that Oracle co-founder Larry Ellison briefly overtook Elon Musk as the world’s richest person. With a substantial long-term revenue outlook and high growth projections, Oracle is having a comeback as a major player in the AI ecosystem.

Why did Oracle’s stock surge recently?


Oracle’s shares increased by 36% on September 10, leading to the biggest single-day gain since 1992. This surge is an aftermath of the company’s announcement of several multibillion-dollar AI cloud infrastructure deals, including one with OpenAI.

Also Read: Explained: What's behind the Oracle rally

What are the deals about?

The most significant deal is a $300 billion, five-year deal with OpenAI, one of the biggest cloud computing agreements ever. Oracle will offer the computing resources and cloud infrastructure required to support OpenAI’s plans. Nvidia, SoftBank, xAI, and Meta are some of the other important clients.

What is Oracle’s backlog, and does it matter?

The backlog of finalised contracts was $455 billion, four times as much as last year. With deals closing, CEO Safra Catz expects it to cross $500 billion. This backlog is an assurance of long-term revenue for investors.

Why is this important?

Oracle now competes with Amazon Web Services and Microsoft Azure in AI infrastructure, with all the deals. Despite Oracle not meeting quarterly revenue projections, investors show confidence in its long-term growth.

What does this mean for the whole AI ecosystem?

Oracle is one of the biggest providers of AI infrastructure for the top firms, which could allow global AI adoption by offering high-power and reliable cloud computing for advanced AI models to businesses and startups.