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Artificial intelligence stocks received a shot in the proverbial arm on Tuesday after strong results from cloud giant Oracle (NYSE:ORCL) gave investors another reason to be optimistic.
The cloud software giant reported fiscal third-quarter results that were better-than-expected and said it has signed a number of big cloud contracts spurred by AI demand not yet in its remaining performance obligations, suggesting the impact of AI is far bigger than investors have come to realize.
“The most important number in our view for the Street and cloud sector is $80 billion of RPO (grew 29% [year-over-year]) that blew away Street expectations on the shoulders of robust cloud demand as AI demand is driving cloud growth across its business,” Wedbush Securities analyst Dan Ives wrote in an investor note.
“The company also cited at least 40 new AI bookings that are over a billion dollars have not come online yet with a massive $10 billion capex budget planned for 2025 (vs. $7.5 billion in 2024) as AI demand is driving further datacenter build outs. AI is accelerating cloud demand and this remains at the epicenter of our AI Revolution … thesis.”
Oracle shares jumped more than 12% in mid-day trading as 35.3M shares changed hands, more than four times the normal average daily volume.
Oracle which has an existing partnership with Nvidia (NASDAQ:NVDA) designed to boost AI adoption in the enterprise, also hinted at an expansion of the collaboration with the GPU giant, stating it has some “exciting joint announcements” to share in short order.
Nvidia is slated to host its annual GTC event starting on March 18. Shares of Nvidia rose more than 5%, while competitors AMD (AMD) and Intel (INTC) rose 1.3% and 0.2%, respectively.
Qualcomm shares ticked up 0.5% after the semiconductor company teased an updated version of its flagship Snapdragon system on a chip.
“[T]he spring dragon raises its head, and everything is reborn!” Qualcomm wrote on the company’s official Weibo account, according to translation. “The new Snapdragon flagship is about to be released. Let’s welcome the New Year and the new era.”
The unveiling is slated to occur on March 18, Qualcomm added in the post.
Bank of America analysts added fuel to the AI fire, saying the technology is causing a “virtuous investment cycle” for big tech companies, suggesting companies like Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG) (GOOGL) and Meta Platforms (META) could spend $180B on capex this year, up 27% year-over-year.
Separately on Tuesday, Meta laid out more details of its two new AI clusters, noting they will contain 24,576 Nvidia H100 GPUs.
However, a shift in architecture suggests that Meta moved from Pure Storage (PSTG) to “internally designed hardware,” Wedbush Securities analyst Matt Bryson wrote in an investor note. Pure Storage shares fell 0.4% in mid-day trading.
Smaller AI-related stocks were on Tuesday, as SoundHound AI (SOUN) jumped 12%, while C3.ai (NYSE:AI) and BigBear.ai Holdings (BBAI) declined 1.3% and 3.3%, respectively.
