ORACLE reported quarterly revenue that topped estimates, signalling the software maker’s cloud business is benefiting from heightened demand for artificial intelligence (AI) workloads. Shares gained in extended trading.

Sales increased 17 per cent to US$13.8 billion in the fiscal fourth quarter, the company said on Monday (Jun 12) in a statement. Analysts, on average, estimated US$13.7 billion, according to data compiled by Bloomberg. Profit, excluding some items, was US$1.67 a share, compared with the average estimate of US$1.58.

“Revenue growth was led by our cloud applications and infrastructure businesses,” chief executive officer Safra Catz said in the statement. “Our infrastructure growth rate has been accelerating.”

Oracle has focused on expanding its cloud infrastructure business to more forcefully compete with Amazon.com, Microsoft and Alphabet’s Google, all of which have seen recent slowdowns. A boom in generative AI, which needs tremendous computing power, may boost demand for Oracle’s cloud services, wrote Alex Zukin, an analyst at Wolfe Research, in a note echoed by several other analysts ahead of earnings. Generative AI startup Cohere said last week that Oracle was among its investors in a US$270 million funding round.

Cloud infrastructure revenue increased 76 per cent to US$1.4 billion in the period ended May 31. Cloud application sales jumped 45 per cent to US$3 billion, the Austin, Texas-based company said.

Shares increased about 3 per cent in extended trading after gaining 6 per cent to close at a record high of US$116.43 in New York. Oracle has rallied 42 per cent this year, compared with the 32 per cent rise in the iShares expanded software ETF.

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Over US$2 billion in cloud capacity has recently been contracted by companies doing large language model development such as Mosaic ML, Adept AI and Cohere, Oracle chairman Larry Ellison said in the statement. “Oracle’s Gen2 Cloud has quickly become the number 1 choice for running Generative AI workloads,” he said.

Oracle’s other big bet – the acquisition a year ago of digital health records provider Cerner, now called Oracle Health – generated US$1.5 billion in the quarter. Oracle began cutting jobs in the division earlier this year after executives promised to improve profitability.

Much of Oracle’s cloud revenue is produced by business applications such as Fusion software for managing corporate finances and NetSuite’s enterprise planning tools, which are targeted at small- and mid-size companies. Fusion sales increased 26 per cent in the quarter, compared with 25 per cent growth in the previous period. NetSuite revenue jumped 22 per cent, a decrease from 23 per cent in the previous period. BLOOMBERG