Oracle stock ORCL gained nearly 4% on Tuesday after a report said OpenAI’s annualized revenue run rate had risen to nearly $70 billion, supported by momentum in enterprise-focused sales.
According to Axios, OpenAI’s annualized revenue run rate has increased by more than 70% since the beginning of the third quarter.
Business-to-business revenue more than doubled over the same period, the report said.
The reported growth lifted Oracle and other stocks linked to OpenAI, outweighing news that OpenAI had scrapped a release plan for its next-generation AI model.
OpenAI growth supports Oracle outlook
The reported financial performance could bolster confidence in companies that count OpenAI as a partner.
Oracle has a $300 billion cloud-computing deal with OpenAI, which is central to the software company’s AI infrastructure push.
“Oracle’s fate is largely tied to the success of OpenAI, which represents around half of its compute backlog,” Gil Luria, managing director at equity research firm D.A. Davidson, said in a Reuters report.
“OpenAI accelerating growth is a very good sign for Oracle, as it reinforces OpenAI’s ability to live up to its expectations for compute capacity,” Luria added.
Oracle’s expanding AI cloud contracts, record remaining performance obligations and accelerating cloud infrastructure revenue are strengthening its revenue visibility.
In the first quarter of fiscal 2027, Oracle booked more than $30 billion in additional AI cloud contracts, lifting its remaining performance obligations, or RPO, to a record $664 billion.
That was an increase of $209 billion from a year earlier.
Management expects around half of the RPO to convert into sales over the next 36 months, creating a substantial multi-year revenue pipeline.
AI infrastructure spending remains high
Oracle’s AI-related growth comes as major technology companies continue to increase spending on computing infrastructure.
Capital expenditures from the primary hyperscalers — Microsoft, Google, Amazon, Meta and Oracle — are expected to reach $780 billion this year. That would be almost five times the amount spent in 2023.
Bain & Company estimates that artificial intelligence-related computing demand must reach $6 trillion in annual revenue by 2031 to justify the infrastructure build-out.
The scale of spending highlights the importance of sustained demand for AI computing capacity as companies expand data-center infrastructure and deploy more GPUs.
Oracle expands data-center capacity
Oracle said it delivered 850 megawatts of additional data-center capacity and had delivered more than 300,000 GPUs since the end of the fiscal fourth quarter.
AI infrastructure utilization remained high at 97.9%. GPUs that were up for renewal were renewed or resold at an average 20% premium.
Oracle also upgraded its fiscal 2027 guidance for total revenue to at least $90 billion, representing 34% year-over-year growth.
The company’s growing AI cloud contracts and higher revenue guidance provide greater visibility into future sales, while the significant capital requirements associated with expanding AI infrastructure remain an important consideration for investors.
The post Oracle stock is gaining and it has OpenAI to thank for appeared first on Invezz
