Oracle shares jump as AI fuels growth. Tech giant partners with AWS.

oracle (ORCL) shares rose late Monday after the technology giant reported the first Quarterly profits and revenues exceeded expectations. In addition, Oracle announced a strategic partnership with cloud services competitor Amazon.comAmazon Web Services (AMZN).

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Oracle said it had adjusted earnings of $1.39 per share on revenue of $13.3 billion in the August quarter. On average, analysts had forecast the Austin, Texas-based company would post adjusted earnings of $1.33 per share on revenue of $13.2 billion, according to FactSet. During the same period last year, Oracle had reported adjusted earnings of $1.19 per share on revenue of $12.5 billion.

“As cloud services became Oracle's largest business line, our operating profit and earnings per share growth accelerated,” Oracle CEO Safra Catz said in a press release.

On the stock market, Oracle shares rose more than 9% to 152.88 in after-hours trading today. The move signals a breakout above a flat base buy point at 146.59 identified by MarketSurge pattern recognition.

Oracle promotes the success of AI

Oracle shares had gained more than 30% year to date at the time of the report. The sharp rise was helped by momentum in Oracle's Cloud Infrastructure business, including winning cloud computing contracts from AI-focused startups, helping Oracle overcome the difficulties that have rocked other software stocks this year.

In its earnings announcement on Monday, Oracle announced that it had signed 42 new cloud contracts for graphics processors valued at 3 billion US dollars total. Graphics processing units, or GPUs, are the chips that power the training and production of AI models. Chairman and Chief Technology Officer Larry Ellison said in a press release that Oracle is building a data center with “acres of NVIDIA (NVDA) GPU clusters for training large AI models.”

Oracle's cloud infrastructure revenue rose 45% to $2.2 billion, a slight acceleration from the 42% increase in the May quarter last year. In the prior quarters, cloud infrastructure revenue rose 49%, 52% and 66%.

Meanwhile, Oracle's remaining performance obligations, or contract work, increased 53% year-over-year to $99 billion, according to Catz.

“RPO growth demonstrates strong momentum for Oracle Cloud and the Oracle AI story,” Barclays analyst Ramo Lenschow said in a client note. “This strong order count should give investors confidence that Oracle can grow revenue this year and next, and makes the (fiscal year) 2026 targets even more realistic in our view.”

Lenschow rates Oracle shares as positively overweight.

Oracle's long-term forecast for fiscal 2026 includes a revenue target of $65 billion. In a conference call with analysts on Monday, Catz reiterated Oracle's expectations of achieving double-digit revenue growth for fiscal 2025, which ends in May. In fiscal 2024, Oracle's revenue grew 6%.

Oracle enters into partnership with Amazon

The “biggest news of all” from Oracle’s earnings call, as Catz described it in her statement, is a multi-cloud agreement with AWS, the largest cloud server provider by market share.

In a separate press release about the deal, Ellison said Oracle is experiencing “huge demand” from customers who want to use multiple cloud providers.

“To meet this demand and give customers the choice and flexibility they want, Amazon and Oracle are seamlessly connecting AWS services with the latest Oracle database technology, including Oracle Autonomous Database,” Ellison said in the press release.

Oracle concluded similar agreements with Microsoft (MSFT) and Google Cloud parent company alphabet (GOOGL) over the past 12 months, leading to some market speculation that Amazon would be next. However, there is a complicated history between the two. Oracle's struggle to catch up to Amazon's huge lead in cloud services has often involved public trash talk between Ellison and Amazon CEO Andy Jassy, ​​who ran AWS before taking the top job at Amazon.

The two rivals appear to be putting aside those differences and offering Oracle Database@AWS. Ellison and AWS CEO Matt Garman will discuss the partnership tomorrow at Oracle's annual CloudWorld event in Las Vegas.

Kirk Materne, an analyst at Evercore ISI, said the partnership “shows that Oracle continues to have strong customer loyalty and could potentially help move more on-premises workloads to the cloud more quickly.” Materne rates Oracle stock as an “outperformer.”

Oracle stock with flat base

The CloudWorld conference will include an analyst day on Thursday, which is another potential catalyst for the stock. Ahead of the report, Oracle shares fell 1.4% to 139.89 in regular trading.

MarketSurge shows that Oracle stock has formed a flat base pattern with a 146.59 buy point. Monday's after-hours moves suggest Oracle could break out of this pattern. In June, Oracle stock broke out of a cup-shaped base pattern above a 132.77 buy point following the release of fourth-quarter results, according to MarketSurge's pattern recognition.

Shares have gained 34 percent since the beginning of the year, outpacing the S&P 500's 15 percent gain. However, Oracle's 14 percent gain over the past 12 months lags the S&P 500's 22.5 percent gain.

Meanwhile, Oracle stock has an IBD Composite Rating of 81 out of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into a single score. The best growth stocks have a Composite Rating of 90 or better.

Additionally, Oracle's IBD Relative Strength Rating is 86 out of 99. The RS rating means that Oracle has outperformed 86% of all stocks in the IBD database over the past year.

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