Yahoo Finance

Oracle shares jumping as it delivers a beat on earnings for the first quarter, the software company also announcing a partnership with Amazon Web Services as well as a multi cloud partnership with Google Cloud. Here to discuss it all is Moore Insights and Strategy founder, CEO and Chief Analyst Patrick Moorhead. Patrick, always great to see you. I want to start, Patrick, with the news. Let's get your take on the earnings print, and also, of course, Patrick, what Oracle CEO Safra Catz is calling here, her words, the biggest news, a multi cloud agreement with AWS. What do you make of it?

Yeah, so this company's on a roll. I mean, like you said, had a beat, beat, but the big news is this deal with AWS. And Josh, hell hath frozen over, okay? These two companies have been essentially at war with each other since AWS was formed 15 years ago. And AWS's thesis before this was they were going to take out Oracle, and that was in addition to Azure and Google for these large enterprise customers. And they would use their database. But what's clear today, and this adds on to the deal that came previously with Microsoft and then Google was that Oracle database is very much alive and well, and their enterprise customers are demanding it. So literally, they're putting Exadata database boxes inside of AWS and giving customers the ability to run the autonomous database on this as well. And what this means for, let's say, AWS is AWS customers who use Oracle as their database can more easily use that data with AWS services, let's say, like Bedrock for generative AI.

And so, Patrick, I'm looking at the reaction right now. Oracle shares are surging on this. We're up 8%. By the way, year to date, this stock was already, had already rallied very hard, about 35% heading into the print. You're seeing 8% move, Patrick. Does that, does that seem justified to you off this news?

It absolutely does. And for the savvy investor, what they recognized is there was this standoff that was happening for 10 or 15 years between Oracle and these classic cloud providers. And what they see is that enterprises want Oracle. They're not going to dump their Oracle database and just shift over to a cloud database. Some have, but not a lot. And they're seeing what this means for the long term.

And so I'm curious, Patrick, often, listen, we, we, you're on the show a lot. We talked about the cloud wars, you talked about the giants and Amazon and Microsoft and Google. How does, and taking this news into account today, how do you think about Oracle's and Larry Ellison's place in that fight? How they compare and contrast?

Yeah, so first and foremost, Oracle is the only company that just does commercial customers. Amazon, Microsoft, and Google, they do commercial, and they have consumer plays. And where Oracle has been exceptionally strong has been in the largest enterprise governments that require the most security, mission critical environments, and very highly regulated. So in the cloud space, they very much compete with both those companies, and there are really three facets of cloud for Oracle. The first one is this classic infrastructure as a service called OCI. While not nearly as big as, let's say, AWS or Azure, it's really targeted at those customers that I talked about. In fact, Azure actually outsources some of its infrastructure to Oracle, particularly on the GPU side. And then you have the SaaS business, the software as a service, competes primarily with Microsoft. That is a cloud play. Now, while cloud is a smaller percentage of revenue than some of these other companies, their commercial business is bigger than Google Cloud. Their commercial business is 60% the size of AWS. So on a scale basis, they're doing quite well.

And Patrick, you know, now we wait for the conference call. I'm curious, Safra Catz will be on that call. I would imagine Larry Ellison too, of course. I'm sure Mr. Ellison will enjoy taking a victory lap on, on this stock moving the after hours. What is their play? I'll get you out of this, Patrick. What is their play in AI specifically?

Yes.

Yeah, their biggest play in AI is data. Josh, the number one thing, I mean our channel checks clearly show that the biggest obstruction from enterprises going hardcore into AI is the data problem. It's getting the data right. It's commingling the right data to give generative AI the right solutions without leaking confidential information. And for the customers I talked about, Oracle is the place to go. So they will be the data broker for the generative AI age for those large customers. That's their play. And also they have this infrastructure play with OCI where they're essentially leasing out GPUs for some very large customers out there, including Microsoft, and I believe a part of OpenAI.

All right, you can see there, Oracle shares popping 8%. Patrick, great to have you on the show today, my friend. Thank you for joining us.

Thank you.