Oracle increases its capacity for generative AI as cloud competition intensifies.

Oracle makes its creative AI better as the battle in the cloud heats up.

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Oracle, a US supplier of cloud infrastructure, is expanding its generative AI capabilities in response to growing cloud competition and an increasing number of businesses embracing AI.

The need for cloud computing services and data centers is rising due to the AI boom, which is being driven by the launch of ChatGPT in November 2022. This is because training AI models requires big quantities of data, and the cloud gives users access to enormous datasets.

In addition to the classical AI that is currently included in its cloud infrastructure and apps, Oracle has been adding generative AI capabilities.

Executive vice president of applications development at Oracle Rondy Ng told CNBC that “classic AI is very good in terms of detecting patterns or predicting numbers… but you cannot use large language models to predict numbers.”

Thus, we integrated the capacity to explain in words with the predictive numbering capabilities. Together, they become quite potent, and you require both. The section that predicts numbers has already reached a highly advanced level in recent years. We will keep improving that as part of the product and won’t stop. According to Ng, generative AI is currently the talk of the town.

Oracle revealed new generative AI technologies in March that are integrated into apps for supply chain, finance, HR, sales, marketing, and service. According to Oracle, the generative AI capabilities may create job adverts and financial reports, increasing productivity and cutting expenses for businesses.

This follows the company’s January announcement that generative AI will be integrated throughout its entire technological stack.

We think Oracle’s AI approach is causing a growth renaissance. In an email to CNBC on Wednesday, Dan Ives, managing director of Wedbush Securities, stated, “[It is] well positioned to be a major beneficiary of the AI revolution.”

Ives stated, “Ellison & co. have a major advantage to monetize the software layer of AI because of the data Oracle sits on and its installed base.” Ellison is the chairman and chief technology officer of Oracle.

In a study released on April 17, research company Gartner stated that while companies highlighted the generative AI narrative last year, technology vendors need to stay ahead of the curve. “They are combining GenAI goods into their enterprise clients’ specified use cases, as well as into their recent developments and services.”

According to JPMorgan, AI, and generative AI may spur further IT investment and expansion in the software market. In a report on March 12, JPMorgan analysts stated, “Many software vendors, including Oracle, have cited benefits from ongoing investments by businesses into AI technologies.”

If Oracle can get a larger-than-expected portion of the expenditure on artificial intelligence, the U.S. investment bank predicted that the business will experience a boost in sales and a beneficial effect on its shares. FactSet data indicates that within the past 12 months, Oracle’s shares have increased by 23.74%.

“Services using generative AI [are] essentially a major edge over our rivals. For that infrastructure and those sorts of services, the competitors will have to collaborate with other businesses and cloud providers. We truly combine everything into a single integrated stack, which we then use,” Ng stated to CNBC.

Rise of AI

In terms of market share for cloud infrastructure services, Oracle has fallen short of competitors like Amazon, Microsoft, and Google, according to Synergy Research Group, which rated Oracle as the sixth-largest service provider globally, along with IBM.

Despite Oracle’s tardiness in adopting cloud infrastructure, the demand for its AI technologies has surged due to the AI explosion. In 2018, Ellison wrote out cloud computing as “pure nonsense.”

Oracle did adhere to the hyperscalers’ lead. For the remainder of 2024 and the near future, at least, [I don’t think] it will be a competitive issue. “We’re just getting started on this whole new generative AI journey,” Futurum Group research director Ron Westfall stated.

In March, Safra Catz, the CEO, announced that the business signed multiple contracts for “large new cloud infrastructure” in the third quarter of its fiscal year. According to Oracle, cloud revenue increased by 25% annually to $5.1 billion.

Deutsche Bank analysts on March 12 stated, “We find it interesting that management has indicated that its Oracle Cloud Infrastructure backlog is substantial and that AI isn’t currently driving revenue, which is expected to be more meaningful in FY25.”

In March, Ellison said that Oracle’s data facility in Salt Lake City would be able to house eight Boeing 747 aircraft from nose to tail.

In outlining potential future market prospects, Ellison stated that he believes more state and federal government applications would be running on platforms such as Oracle Cloud Infrastructure. He also mentioned that the company is in the process of negotiating sovereign regions with many nations.

“An additional domain in which Oracle is leading the way, despite everyone’s haste, is providing autonomous artificial intelligence clouds – which function solely within a nation,” stated Westfall.

“More and more nations are going to declare that they want all of the data and information related to general artificial intelligence to be kept domestically.”

Oracle said in April that it will expand its cloud computing and artificial intelligence infrastructure in Japan by spending over $8 billion over the next ten years.

In March of this year, Oracle and Nvidia announced their partnership to provide global clients with sovereign AI solutions.

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