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TMTPOST -- Oracle Corporation on Thursday confirmed a cloud deal with Facekbook operator Meta Platforms, Inc., and seems to reassure investors with the stronger-than-expected guidance for the coming years.
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In just 30 days of the current quarter, Oracle Cloud Infrastructure (OIC) signed $65 billion in new cloud infrastructure commitments, said one of new co-CEOs Clay Magouyrk at Oracle』s annual AI World conference in Las Vegas on Thursday. Importantly, he noted the new commitments that Oracle』s cloud unit booked came from seven contracts with four customers rather than OpenAI, and one of these customers is Meta.
「It was across seven different contracts from four different customers,」 Magouyrk said. 「None of those customers are OpenAI. I know some people are questioning sometimes, 』Hey, is it just OpenAI? The reality is, we think OpenAI is a great customer, but we have many customers.」
Oracle last month was reported to discuss with Meta for a multi-year cloud computing deal worth about $20 billion. Under the reported deal, Oracle would supply computing capacity for Meta』s training and deploying AI models.
Oracle leadership at Thursday』s meeting also released rosy financial guidance for these years.
The software make foresees $20 billion in artificial intelligence (AI)-powered database and AI data platform revenue in the 2030 fiscal year, representing a big jump from the $2.4 billion expected in fiscal 2025 and the $3 billion projected a year later.
The annual revenue for fiscal year 2030 is projected to be $225 billion, beating the $198 billion average estimate of analysts, and expected $21 per share of adjusted profit by that year, versus analysts』 average anticipation of $18.5 a share. Oracle projected $166 billion in cloud-infrastructure revenue by fiscal 2030, growing revenue at a rate of 75% each year.
Oracle provided a surprisingly high margin outlook for its AI datacenter business, mitigating concerns over profitability of a critical new business unit. The company said delivery of AI cloud computing infrastructure is anticipated to generate adjusted gross margins of between 30% and 40%, while other segments such as more conventional cloud software and infrastructure for business customers would have margins of between 65% and 80%. Mizuho analyst Siti Panigraphi in a note last week had expected OIC gross margins of 25%.
Oracle saw those margins to be steady over the term of a contract. In a presentation to investors, the company took an example of an infrastructure project for AI workloads, which would bring a total of $60 billion in revenue over six years, and book about $6.4 billion of costs per year. That would lead to a gross margin of 35%. The margin profile on this example is 「illustrative of even the very largest customers,」 Magouyrk told analysts at the meeting.
That margin defied a report last week that raised new concerns over profitability of AI computing, Oracle』s highly anticipated business driving its stock surged more than 70% to the date this year.
For the first quarter of the fiscal year 2026 ended August 31 (Q1), Oracle』s rentals of servers generated around $900 million and booked gross profit of $125 million, equal to profit of $0.14 for every 1% of sales, The Information reported on October 7, citing internal documents. That represented a gross margin of 14%, significantly lower than Oracle』s overall margin of around 70% and also lower than many on Wall Street have been anticipating.
While sales from Oracle』s rental of servers powered by Nvidia Corporation AI chips nearly tripled over the past year, it just recorded an average gross margin of about 16% in the same period , ranging from less than 10% to slightly more than 20%, according to the reported documents.
