Oracle Enhances Generative AI Amid Escalating Cloud Competition

U.S. cloud company Oracle is making its AI (artificial intelligence) smarter as competition in cloud services gets tougher and more companies use AI.

The AI boom, sparked by the launch of ChatGPT in November 2022, is making more companies want cloud services and data centers. AI needs lots of data for training, and the cloud gives access to huge datasets. Oracle is adding generative AI to its cloud and apps, along with the traditional AI it already has.

Rondy Ng, an executive at Oracle, explained, “Classic AI is great at spotting patterns or predicting numbers… But you can’t use big language models to predict numbers. So, we combined predictive numbers with explanations in words. Both are important. The number prediction part is already mature, but generative AI is the hot topic now.”

Demand for AI technology increases, driving Oracle’s cloud revenue up by 25%. (Credits: iStock)

In March, Oracle said it added more generative AI features to its apps for finance, supply chain, HR, sales, marketing, and service. These features can do things like make financial reports and write job ads, saving time and money for businesses.

Before that, Oracle had already put generative AI across its tech in January.

Dan Ives, from Wedbush Securities, said, “We think Oracle is seeing growth with its AI strategy and is well positioned to benefit from the AI revolution. Oracle has lots of data and existing customers, giving it an advantage to make money from AI.”

Oracle Enhances Generative AI Amid Escalating Cloud Competition
Despite lagging behind rivals, Oracle signs major contracts for cloud infrastructure. (Credits: iStock)

As companies talked about generative AI last year, tech providers have to keep up. They’re adding GenAI (generative AI) to their products and services as businesses find new uses for it.

JPMorgan said AI could lead to more spending and growth in software. “Many software companies, including Oracle, are benefiting from businesses investing in AI,” said JPMorgan analysts.

If Oracle can grab more AI spending, it might make more money and its shares could go up. Oracle’s shares have gone up by 23.74% in the last year.

Ng explained, “Our generative AI services are a big advantage over our competition. They have to work with different companies and cloud providers. We have everything in one package.”

The Progress In AI

Oracle has fallen behind competitors like Amazon, Microsoft, and Google in the cloud infrastructure market, according to Synergy Research Group. They rank Oracle as the sixth-largest provider globally, alongside IBM.

AI growth is expected to play a significant role in Oracle’s revenue from FY25 onwards. (Credits: iStock)

Even though Oracle was late to the cloud infrastructure game, the demand for its AI technology has gone up with the AI boom. Back in 2018, Ellison, Oracle’s chairman, dismissed cloud computing as “complete gibberish.”

Ron Westfall, a research director at Futurum Group, said, “Oracle followed the big cloud companies. But that’s not a big problem for now, at least for the rest of 2024. We’re just starting this new journey with generative AI.”

In March, CEO Safra Catz announced that the company had signed several big contracts for cloud infrastructure. Oracle’s cloud revenue went up by 25% to $5.1 billion compared to the previous year.

Deutsche Bank analysts noted, “What’s interesting is that Oracle says it has a significant backlog of orders for its cloud infrastructure, and AI isn’t making much money yet. They expect it to be more important in fiscal year 2025.”

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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