Oracle Corp Chief Executive Larry Ellison during a launch event at the company’s headquarters in Redwood Shores, California June 10, 2014.
Noah Berger | Reuters
Oracle’s ambitious growth forecast for its cloud infrastructure business is sending ripples of optimism throughout the tech sector, and beyond.
The database giant projects cloud sales reaching a staggering $114 billion by fiscal year 2029. This forecast signals sustained robust demand for artificial intelligence processing in the coming years, necessitating significant expansion of Oracle’s data center footprint.
UBS analyst Karl Keirstead highlighted the magnitude of Oracle’s projections in a note, stating, “The guide for a 14x expansion of Oracle’s cloud infrastructure segment over 5 years, driven largely by GPU cloud demand, and the planned $35 billion in capital expenditures for FY26, is decidedly bullish for Nvidia, other AI hardware vendors, and the ecosystem of partners involved in building and financing Oracle’s GPU data centers.” This forecast speaks to a profound reshaping of the cloud landscape, with Oracle positioning itself as a major player in supporting the compute-intensive demands of AI.
Following Oracle’s shares surging 40% on Wednesday, companies supplying the chips and systems integral to Oracle’s infrastructure buildout, as well as those competing in the cloud space, experienced a corresponding boost in their stock valuations. This illustrates the interconnected nature of the technology market, where the success of one company can have a cascading effect on others.
Nvidia, a key supplier whose chips and systems are estimated to account for approximately 70% of the budget for a typical AI data center, saw its shares climb by 4%. This underlines Nvidia’s dominant position in providing the high-performance computing power crucial for AI applications. The surge underscores investors’ confidence in Nvidia’s continued growth and its ability to capitalize on the burgeoning AI infrastructure market.
Taiwan Semiconductor Manufacturing Co. (TSMC), a critical foundry for Nvidia and other companies developing AI-related silicon, rose over 4% on Wednesday after reporting a 34% increase in August sales. This reflects the surging demand for advanced chip manufacturing driven by the AI boom. As the primary manufacturer of cutting-edge processors and ASICs for AI accelerators, TSMC is a crucial partner in enabling the build-out of the global cloud and AI ecosystems.
Broadcom, a provider of networking solutions essential for interconnecting Nvidia chips within data centers, and a key player in custom AI chip design for entities like Google, experienced a notable 9% increase. This highlights the company’s importance in delivering the high-bandwidth, low-latency connectivity required for AI workloads and in delivering optimized AI compute solutions to hyperscale players.
AMD, Nvidia’s principal competitor in the AI-focused GPU market, saw its shares rise 3%. Although AMD currently holds a relatively small share of the GPU market, its advancements in GPU and CPU technology for AI inference and other solutions make them a significant player to watch. The stock’s upward movement suggests increasing investor confidence in AMD’s competitiveness in the growing AI market.
Micron, a manufacturer of memory solutions utilized in Nvidia’s advanced chips, rose 4%. High-bandwidth memory is a crucial enabling technology for advanced AI applications and Micron’s products are vital components within cutting-edge AI hardware architectures.
Super Micro and Dell, both providers of complete server systems incorporating Nvidia chips, each posted gains of 4%. They are playing a valuable role in data center environments with integrated, pre-validated solutions optimizing the performance of Nvidia’s GPUs.
Oracle’s robust capital expenditure plans underline the fundamental shift toward cloud infrastructure as a high-growth area. As Oracle’s Safra Catz noted , “The vast majority of our CapEx investments are for revenue-generating equipment that is going into the data centers,” signaling a commitment to meet the expanding demand for cloud services.
CoreWeave, a “neo-cloud” provider specializing in AI compute resources and a direct competitor to Oracle, saw its stock rise over 20%. This underscores increased investor optimism about the possibilities created by insatiable demands for AI platforms. These companies are specifically targeted at offering dedicated AI infrastructure to organizations that allows them to differentiate on ease of access and optimized performance for AI workloads.
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