Oracle has revealed that the cloud will be used by Microsoft to run workloads for OpenAI.
Big Red described the deal as a sign that Redmond will extend the Azure Al platform to Oracle Cloud Infrastructure (OCI) to provide additional capacity for OpenAl.
The latter outfit’s CEO, Sam Altman, came up with a canned quote that “OCI will extend Azure’s platform and enable OpenAI to continue to scale” – which sounds a lot like Azure’s appetite for Open AI for GPUs can’t calm down.
During Oracle’s Q4 2024 earnings call — the same day the OpenAI news was revealed — chairman and CTO Larry Ellison told investors that Big Red is building what he described as “a very, very, you know , large data center, very large’, half of which will be used by Microsoft.
“A lot of Nvidia chips, the new Nvidia chips, the new Nvidia interconnect; liquid-cooled; and they’re primarily for training. I mean, not for inference. It’s for doing tons and tons of training,” he said, you know. .
Also on Tuesday, Oracle announced it is partnering with Google, making the advertising giant’s Cross-Cloud Interconnect service available in 11 OCI regions. Databases are never far from Oracle’s thoughts, and Oracle Database@Google Cloud is promised for a debut later in 2024.
Oracle’s Q4 2024 revenues were $14.3 billion this quarter, up three percent year over year. Cloud services and licensing support revenues rose nine percent to generate $10.2 billion in revenue.
CEO Safra Ada Catz revealed that Oracle signed “the largest sales contracts in our history in this quarter, led by tremendous demand for training large language models, as well as record sales levels for OCI, Autonomous, Fusion and NetSuite.”
“As you know, Oracle’s fourth quarter is known for customers buying large software licensing contracts to power their businesses,” she added – a nod to the software giant’s annual year-end sales push. This year, Catz says, buyers have also spent a lot of money “because the move to cloud, this fourth quarter was made possible by the huge demand for our cloud services and residual performance obligation (RPO) emerged.”
Customers are trading one-time one-time license revenues in exchange for much larger strategic customer commitments for multi-year cloud revenues, she added, stating: “This is exactly what we are focused on, and it reinforces my confidence that our overall revenue, profit and cash flow performance, as well as our growth rates, will only continue to strengthen and accelerate.”
Oracle now has $98 billion in RPO on its books.
Catz described the quarterly result as an “incredible quarter” and “the full emergence of our fast-growing cloud business.”
Its annual revenue of $53 billion represented six percent annual growth, but Catz offered a tip on how to accelerate that figure, predicting that “infrastructure services will grow faster than the 50 percent we reported this year.”
The party will start in the first quarter, with the CEO predicting sales growth of six to eight percent year-on-year.
Ellison believed that Oracle has a lot of room to grow because “this AI race is going to continue for a long time.”
“It’s not a matter of moving forward… you also have to keep your model current, and that requires bigger and bigger data centers. And some of the data centers we have and are planning are even bigger.”
“Some are getting very close to, dare I say it, a gigawatt, which is a pretty big city or a huge AI cloud training data center,” he noted.
Oracle, he claimed, can build such data centers. Or little ones that fit in a submarine.
Big Red’s investors blew up the ballast tanks, sending the stock price from about $123 before the results announcement to about $135 after the bell. ®