Oracle Corp.

shares surged to a record after the company gave an aggressive outlook for its cloud business, stunning

Wall Street

and galvanizing hopes that the post-ChatGPT global AI infrastructure build-out is accelerating.

The company is on track to add about US$200 billion to its market value if the stock’s 30 per cent premarket gain holds through Wednesday’s trading. AI-related stocks such as chip developer

Nvidia Corp.

and its Asian suppliers also climbed.

Oracle’s forecast highlights the need for global AI developers to keep accelerating their investments — its customer OpenAI alone estimates it will require trillions of dollars over time to spend on the infrastructure required to develop and run its services. Oracle is emerging as a key provider of such computing capacity, competing against cloud leaders

Amazon.com Inc.

,

Microsoft Corp.

and Alphabet Inc.’s Google.

While known for its database software, Oracle has recently found success in the competitive cloud computing market. Earlier this summer, it inked an unprecedented commitment with ChatGPT operator OpenAI for 4.5 gigawatts’ worth of data center capacity — enough energy to power millions of American homes. It also counts companies such as Nvidia and ByteDance’s TikTok as major cloud customers.

Such deals helped boost remaining performance obligations — a measure of bookings — to US$455 billion at the end of the fiscal first quarter, Oracle said Tuesday. That’s more than four times higher than the same period a year earlier.

“We’re all kind of in shock in a very, very good way,” Brad Zelnick, an analyst at Deutsche Bank, said during Oracle’s earnings conference call. “There’s no better evidence of a seismic shift happening in computing than these results that you just put up.”

Major U.S. companies have in recent days given investors reason for optimism about the pace and sustainability of AI spending. Last week, Broadcom Inc. said it had landed a major new customer in this area — later identified by people familiar with the matter as OpenAI — and surprised investors with a better-than-anticipated outlook.

If Oracle’s stock gains hold during regular market hours, it will surpass the last record high of US$256.43 set on Aug. 6. Oracle’s stock was up 45 per cent this year through Tuesday’s close, four times the gain seen in the

S&P 500

. Nvidia shares rose 1.5 per cent in extended trading. In Asia, Nvidia suppliers rallied in Japan and South Korea in early morning trading, with Advantest Corp. rising as much as 3.1 per cent and SK Hynix Inc. advancing 5.2 per cent.

Recent and upcoming bookings will translate to a rapidly expanding cloud infrastructure business over the coming years, Oracle chief executive Safra Catz said. That unit will expand 77 per cent to US$18 billion this fiscal year and continue to grow at an aggressive clip, reaching US$144 billion in annual revenue by the fiscal year ending in May 2030, she said. The outlook exceeded Wall Street estimates.

“It was an astonishing quarter,” and demand for Oracle cloud infrastructure continues to build, Catz said. The company signed four multibillion-dollar contracts with three different customers in the quarter and expects to sign up several additional customers in the coming months, she added, pushing remaining performance obligations above US$500 billion.

Cloud infrastructure revenue increased 55 per cent to US$3.3 billion, while analysts anticipated a 53 per cent expansion. Profit, excluding some items, was US$1.47 a share. That compared with a US$1.48 average estimate.

Investors are keen to know more about the long-term profitability of Oracle’s cloud infrastructure work to serve AI customers. Wall Street expects the company’s free cash flow to be negative for a second consecutive year due to the extreme costs of building out data centres.

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Capital expenditures will be about US$35 billion this year, Catz said on a call with analysts Tuesday. That’s a steeper expense than the US$26 billion anticipated by Wall Street.

The company is implementing more AI internally, which should help improve operating income, Catz said. Oracle has cut hundreds of workers in layoffs in recent months.

With assistance from Jeanny Yu and Ville Heiskanen

Bloomberg.com