Tech Explained: Here’s a simplified explanation of the latest technology update around Tech Explained: Oracle Regains Its Footing amid SaaSpocalypse in Simple Termsand what it means for users..
Oracle has looked into the future, and swears it sees a world in which it will still be relevant post-SaaSpocalypse.
Its proof? Just a stellar quarterly earnings report, which raised hopes that the company’s massive AI infrastructure bets will actually pay off. The win proved enough to push the company’s shares up more than 9% Wednesday, delivering a welcome reversal from a months-long selloff.
Head in the Clouds
Oracle has not been able to catch a break for months now. First, shareholders grew wary that the company’s massive capex to become a major cloud provider in the AI age would place it inside the tech industry’s possibly ballooning bubble. Then came this year’s Claude-led SaaSpocalypse, which sparked fears that the very AI boom that Oracle’s cloud business is fueling could eviscerate the company’s core data-crunching software business. The double whammy has thus pushed shares down roughly 50% from a September peak.
Larry Ellison, executive chairman and chief technology officer, insisted the rise of AI coding agents is a tailwind, not a headwind, for Oracle’s software business. “Yes, some smaller or single-focused SaaS players may well be disrupted … but we think we are the disruptor,” Ellison said, while highlighting how the company is using AI agents to both expand and enhance its software suite.
Still, the company went to great lengths to show its capex eyes aren’t bigger than its stomach:
- The company’s cloud division posted revenue of $8.9 billion in the latest quarter, accounting for 52% of total revenue, up from 44% a year ago. Oracle also reported remaining performance obligations of $553 billion, a 325% year-over-year spike.
- The company expects total capital expenditures for the fiscal year ending in May to run $50 billion, or double the year prior, with plans to reach $85 billion by 2029. But Oracle said it is requiring cloud customers to help finance its growth through a mix of up-front payments and a system in which customers supply their own chips for Oracle’s data centers.
Oracle’s credit risk, which has spiked since its AI buildout, fell to a one-month low following the earnings call, according to ICE Data Services figures seen by Bloomberg. Meanwhile, RBC Capital analyst Rishi Jaluria wrote in a note that Oracle is “demonstrating its ability to increase capacity without the need for additional financing.”
No Swiping: Earnings filings this week also revealed that Oracle’s roughly 15% stake in the new US-controlled version of TikTok is valued at about $2.2 billion. That makes the ultra-popular short-form video app’s current market cap roughly equal to … Pinterest?