On Wednesday, shares of U.S. software giant Oracle surged nearly 36% in a single day, marking their largest gain since 1992, with its market capitalization briefly exceeding $933 billion. This staggering performance not only propelled the company to the forefront of the artificial intelligence infrastructure race but also briefly elevated co-founder Larry Ellison above Tesla CEO Elon Musk as the world’s richest person.
Behind the stock surge is a massive five-year supercomputing procurement contract between OpenAI, the parent company of ChatGPT, and Oracle, with a total value reaching $300 billion. The contract is expected to consume up to 4.5 gigawatts of electricity—equivalent to the output of two Hoover Dams or enough to power 4 million U.S. households—making it one of the largest deals in the history of global cloud computing. This agreement not only underscores the rapidly growing demand for computing power in the global AI industry but also effectively alleviates market concerns about a potential bubble in the AI sector.
In addition to OpenAI, Oracle boasts heavyweight clients such as NVIDIA and TikTok, and its influence in the AI infrastructure business is expanding rapidly. According to the latest fiscal quarter data as of August 31, Oracle’s remaining performance obligation (RPO) soared to $455 billion, a fourfold increase year-over-year, now exceeding the backlog of Google Cloud by more than four times. During the earnings call, CEO Safra Catz revealed that the company signed four contracts worth billions of dollars with three customers this quarter and expects RPO to surpass $500 billion in the near term.
Although adjusted earnings per share of $1.47 and total revenue of $14.9 billion fell slightly short of market expectations, cloud infrastructure revenue still achieved robust growth of 55%, reaching $3.3 billion. Catz noted that the current expansion in capital expenditure is part of the company’s long-term strategy, with projected capital spending for this fiscal year reaching $35 billion, significantly higher than Wall Street’s forecast of $26 billion. Due to the substantial investments required for data center expansion, the market anticipates that free cash flow may remain negative for the second consecutive year. To enhance operational efficiency, the company has widely deployed AI technologies internally and implemented layoffs affecting hundreds of employees.
Oracle’s strong performance has fueled optimism across the entire AI industry chain. NVIDIA’s stock rose by 3.85%, and several AI-related stocks rebounded in tandem, reflecting a significant recovery in market confidence regarding computing power investments. Additionally, Broadcom recently disclosed that it secured a major order from OpenAI, further confirming that global AI giants are continuing to ramp up infrastructure investments, driving a new wave of capital expenditure. This stock price surge marks Oracle’s successful strategic transformation into the AI infrastructure sector.
