Oracle has announced mixed fiscal 2025 second quarter results alongside a new AI deal with Meta, following a failed server deal with Elon Musk’s AI startup xAI earlier this year.
While seeing consistent growth over the quarter, Oracle generally underperformed compared to analysts’ estimates with Q2 total revenue of $14.1bn, up 9 percent, and issued a weaker-than-expected forecast.
The company has the uneasy task of competing with hyperscalers Microsoft, AWS and Google Cloud which are currently dominating the field with notable presence, especially in AI.
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While it may not have rebranded itself as the AI ERP and cloud choice du jour just yet, Big Red believes it’s on a growth trajectory amid soaring demand for computing power that can handle artificial intelligence projects. CEO Safra Catz shared that “record level AI demand drove Oracle Cloud Infrastructure revenue up 52 percent in Q2, a much higher growth rate than any of our hyperscale cloud infrastructure competitors.”
“Growth in the AI segment of our Infrastructure business was extraordinary – GPU consumption was up 336 percent in the quarter – and we delivered the world’s largest and fastest AI SuperComputer,” the CEO added.
In line with this AI enthusiasm, Oracle announced it has signed a deal with Facebook parent Meta for the social media giant to use Oracle Cloud to enhance the training and deployment of its Llama LLM family.
The news comes several months after Elon Musk’s AI startup xAI and Oracle ended talks on a potential $10bn server deal, due to disagreements over timeline and power supply concerns, as reported by Reuters in July.
Larry Ellison, Oracle chairman and CTO, explained more about the company’s training potential in the earnings call: “Oracle Cloud Infrastructure trains several of the world’s most important generative AI models [OpenAI, xAI, Nvidia, Cohere] because we are faster and less expensive than other clouds […] Oracle is training AI models and developing AI agents that will improve the rate of scientific discovery and economic development and corporate growth throughout the world. The scale of this opportunity is unimaginable.”
Oracle’s infrastructure cloud services have now reached an annualized revenue of 9.7bn while OCI consumption revenue was up 58 percent as demand continues to outstrip supply,” Catz added.
The company’s remaining performance obligation (RPO) is up 50 percent to $97bn, driving its positivity that growth rates will continue to climb. “This fiscal year, total Oracle Cloud revenue should top $25bn,” the CTO predicted – time will tell if this particular oracle is right.
