Oracle cannot keep up with demand for its industry-leading artificial intelligence (AI) data centers.
oracle (ORCL 0.65%) has participated in nearly every technological revolution. Over the past 25 years, it has helped companies prepare for the dawn of the internet, cloud computing, and now artificial intelligence (AI).
The company operates some of the best AI data center infrastructure in the industry, enabling developers to scale up to 32,768 NVIDIAgraphics processing units (GPUs), more than many of its top competitors. More GPUs mean bigger AI models.
Oracle’s RDMA (Random Direct Memory Access) networking technology moves data from one point to another faster than traditional Ethernet networks. Because developers pay per minute for computing capacity, this results in significant cost savings.
Chairman Larry Ellison says Oracle’s Gen2 AI data centers can train AI models twice as fast and at half the cost of competing infrastructures.
Oracle sells data center capacity as part of its Cloud Infrastructure (OCI) segment. The segment’s revenue has grown more than 40% annually for the past four quarters, making it the fastest-growing part of the entire company:
Oracle forecasts OCI revenue growth of over 50% for fiscal 2025. The company will report its first-quarter results (ended August 31) in early September, so investors should keep a close eye on the segment.
Growth could potentially accelerate in the coming quarters as demand for Oracle’s infrastructure exceeds supply, as evidenced by the company’s remaining performance obligations in the fourth quarter of fiscal 2024 (ended May 31), which rose 44% to a record $98 billion, including $12.5 billion in contracts with over 30 AI companies.
To meet this demand, Oracle is rapidly building new data centers. Revenue growth will benefit from the commissioning of the new locations.
Anthony Di Pizio does not own any stocks mentioned. The Motley Fool owns and recommends Nvidia and Oracle. The Motley Fool has a disclosure policy.
