By Harshita Mary Varghese
(Reuters) -Oracle said on Monday it is set to make a joint announcement with chip-giant Nvidia (NASDAQ:NVDA), and it beat estimates for quarterly profit, riding on the generative AI demand boom, sending shares up nearly 14% in extended trading.
The late-day rally in Oracle (NYSE:ORCL)'s shares added more than $40 billion to its stock market value.
The 46-year-old database giant has been trying to reinvent itself as a cloud-computing provider by offering services cheaper than those of rivals such as Amazon.com (NASDAQ:AMZN).
It has tried to drum up demand for its subscription plans through partnerships with rival Microsoft (NASDAQ:MSFT) and AI chip leader Nvidia, which makes chips that power supercomputers and can be used by customers of Oracle's cloud service.
"We expect to continue receiving large contracts reserving cloud infrastructure capacity because the demand for our Gen2 AI infrastructure substantially exceeds supply — despite the fact we are opening new and expanding existing cloud datacenters very, very rapidly," CEO Safra Catz said.
Oracle executives mentioned Nvidia at least three times during their call with analysts and said a joint announcement will be made in the coming week.
Excluding items, the company posted profit of $1.41 per share for the third quarter, up 16%, above LSEG estimates of $1.38 per share.
"While results for the quarter were merely in line with expectations ...investors are excited about the new business Oracle won during the quarter," said Gil Luria, a research analyst at D.A. Davidson.
Remaining Performance Obligations, the most popular measure of booked revenue, was up 29% compared with a year earlier, which bodes well for the upcoming results, Luria said.
However, revenue of $13.28 billion for the three months ended February 29 was below analysts' average estimate of $13.30 billion.
For the current quarter, Oracle forecast revenue growth to be in the range of 4%-6%, which was below analysts' average estimate of about 6.5%, according to LSEG data.