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Investing.com - Oracle (NYSE:ORCL), a $903.7 billion market cap tech giant with robust revenue of $59.02 billion, saw its stock move higher on Thursday after Mizuho Securities provided clarity on the company’s artificial intelligence gross margins following comments from Oracle’s CEO. According to InvestingPro data, Oracle maintains an impressive overall gross profit margin of 69.66%.
The CEO of Oracle stated during the company’s Financial Analyst Meeting that Oracle Cloud Infrastructure (OCI) AI gross margins are expected to range between 30% and 40%, according to Mizuho’s research note.
This projection significantly exceeds recent estimates published in The Information, which had suggested AI gross margins were only in the mid-teens percentage range.
Mizuho further noted that Oracle’s non-AI OCI gross margins currently stand in the 40-60% range, which the firm said reinforces their existing view on the company’s profitability structure.
The clarification comes amid growing investor interest in the profitability of cloud providers’ AI infrastructure investments, as companies across the technology sector race to build capacity for generative AI workloads.
In other recent news, Oracle has projected that its cloud infrastructure revenue will reach $166 billion by fiscal year 2030, highlighting the company’s strong growth trajectory in cloud and AI infrastructure. This announcement was made during a Financial Analyst meeting, where Oracle executives also noted a 77% year-over-year growth in its distributed cloud offering, with an average deal size of $67 million. Additionally, the Choctaw Nation of Oklahoma has adopted Oracle Fusion Cloud Applications to improve efficiency and preserve its language, utilizing AI capabilities to automate processes and reduce costs across its operations. The United States Department of the Air Force has also implemented Oracle’s cloud applications to enhance its business processes and digital transformation, supported by a new Authority to Operate at Defense Information Systems Agency Impact Level 4. Furthermore, Oracle has launched a new AI Agent Marketplace for its Fusion Applications, allowing customers to deploy partner-built AI agents directly within their workflows. This expansion is part of Oracle’s efforts to accelerate AI adoption and help customers tackle complex business challenges. Oracle has also embedded new AI agents within its Fusion Cloud Applications suite, designed to enhance decision-making across various operations, including finance and HR. These agents, powered by large language models, are integrated at no additional cost to customers, aiming to improve task efficiency within existing workflows.
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