Oracle will be 'data broker' for the gen. AI future: Analyst

Shares of Oracle (ORCL) are climbing after the company posted better-than-expected first quarter results and announced partnerships with tech giants Amazon (AMZN) and Google (GOOG, GOOGL). Moor Insights & Strategy founder, CEO, and chief analyst Patrick Moorhead joins Asking for a Trend to dig into the earnings and discuss how the company stands to benefit from the AI race.

Moorhead says that Oracle is "on a roll," and that the partnership with Amazon Web Services (AWS) is monumental as "these two companies have been essentially at war with each other since AWS was formed 15 years ago." Combined with the Google partnership, he explains that the "Oracle database is very much alive and well, and their enterprise customers are demanding it."

He believes that the jump in the stock is justified, arguing, "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." He notes that Oracle is the only company that focuses solely on commercial customers, while other names like Amazon have both commercial and consumer plays.

"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," he adds. Moorhead highlights three facets of cloud enterprises for the company: its Oracle Cloud Infrastructure (OCI), SaaS (Software as a Service) segment, and its commercial business. "On a scale basis, they're doing quite well," he says.

As AI becomes more of a priority, Moorhead notes that data will be the company's biggest play. He explains, "The biggest obstruction from enterprises going hardcore into AI is the data problem. It's getting the data right. It's co-mingling 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 more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Melanie Riehl

Video Transcript

Oracle shares jump in as it delivers a beat on earnings for the first quarter of 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 more insights and strategy founder, Ceo and chief analyst, Patrick Moore.

Uh Patrick, always great to see you.

I wanna start Patrick with the news.

Let's get your take on uh the earnings print.

And also, of course, Patrick with Oracle, Ceo Sofer Katz is calling here her words, the biggest news, a multi cloud agreement with AWS.

What do you make of it?

Yeah.

So this company is uh uh on a roll.

I mean, like you said, had a BB, but the big news is this deal with Aws and Josh Hell has frozen over.

OK.

These two companies have been essentially at war with each other uh since Aws was formed 15 years ago.

And Aws is uh thesis before this was they were gonna take out Oracle and that was in addition to uh Azure and Google for these large enterprise customers and they, they would use uh their database.

But what's clear today.

And this adds on to the deal uh that came previously with Microsoft and then Google was that Oracle Database is very much uh alive and well.

And their enterprise customers are demanding it.

So literally, they were putting exit database boxes inside of Aws and uh 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 or generative A I.

And so Patrick, I'm looking at the reaction right now.

Oracle shares are surging on this.

We're up 8%.

And by the way, you know, you to date, the stock was already, had already rallied very hard, about 35%.

Hang into the print.

You've seen 8% move Patrick does that, does that seem justified to you off this news?

It absolutely does.

And for the Savvy investor, what they recognize is there was this standoff that was happening for 10 or 15 years between Oracle and these classic uh cloud providers and, and what they see is that, that enterprises want oracle, they're not gonna dump their Oracle database and just shift over to a, a cloud database.

Some have but not a lot.

And, and they're seeing what this means for the long term for Oracle.

And so I'm curious, Patrick often listen, we, we you're on the show a lot, we talk about the cloud wars, you talk about the Giants and Amazon and Microsoft and Google.

How does, and, and taking this news into account today, how do you think about Oracles and Larry Ellison's place in that fight?

How they compare and contrast?

Yeah.

So first and foremost, um Oracle is the only company that just does commercial customers.

Amazon, Microsoft and Google.

Uh they do commercial and they have consumer plays And Or 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 they're really uh three facets of cloud or uh Oracle.

And the first one is this classic infrastructure as a service uh called OC I uh while not nearly as big as let's say Aws or Azure, it's really targeted at, at those customers that I talked about.

In fact, uh Azure actually outsources some of its infrastructure uh to oracle, particularly on the, on the GP U side.

And then you have the SAS business, the software service competes primarily with Microsoft that is a cloud play.

Now, while cloud is a smaller percentage of revenue than some of these uh other companies, their commercial business uh is bigger than Google cloud.

Uh their commercial business is 60% the size of AWS.

So on a scale basis, uh they're doing quite well and Patrick, you know, now we wait for the conference call.

Um, I'm curious, you know, software cats will be on, like, how 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 A I specifically?

Yeah, their biggest play I play in A I is Data Josh, the number one thing I mean, our channel checks clearly show that the biggest obstruction from enterprise is going hardcore into A I is the data problem.

It's getting the data right.

It's commingling the right data to give generative A I the right solutions about leaking all financial information.

And for the customers I talked about Oracle is the place to go.

So they will be the data broker for the generative uh A I for those large customers.

That's their play.

And also have this infrastructure play with OC I where they're essentially leasing out BPU for some very large customers out there, including Microsoft.

And I believe a part of open A I.

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.