Oracle beats quarterly profit expectations on AI-driven cloud demand

(Reuters) -Oracle beat estimates for quarterly profit on Monday, as demand rose for its cloud-computing services on the back of a boom in generative AI.

Shares of Oracle jumped 9.8% to $125.31 in extended trading.

The 46-year-old database giant has been trying to reinvent itself as a cloud-computing provider by offering services cheaper than those of rivals such as Amazon.com.

It has tried to drum up demand for its subscription plans through partnerships with rival Microsoft and AI chip leader Nvidia, which has powerful and expensive supercomputers that can be used by customers of Oracle’s cloud service.

“We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply — despite the fact we are opening new and expanding existing cloud datacenters very, very rapidly,” CEO Safra Catz said.

Excluding items, the company posted profit of $1.41 per share for the third quarter, up 16%, above analysts’ average estimate of $1.38 per share, according to LSEG data.

However, revenue of $13.28 billion for the three months ended February 29 was below analysts’ average estimate of $13.30 billion.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Krishna Chandra Eluri)