The logo of American multinational computer technology company Oracle is pictured at the Mobile World Congress (MWC), the largest annual gathering of the telecommunications industry, in Barcelona on February 27, 2024. The world’s largest mobile trade show opens its doors in Barcelona with the industry to look to artificial intelligence to try to reverse declining sales. (Photo by PAU BARRENA/AFP) (Photo by PAU BARRENA/AFP via Getty Images)
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US cloud infrastructure provider Oracle enhances AI manufacturing capabilities as cloud competition intensifies and more companies enter AI.
The AI boom — fueled by the November 2022 launch of chatbot ChatGPT — is driving demand for cloud computing services and data centers as large amounts of data are needed to train AI models and the cloud provides access to massive sets data.
Oracle is introducing AI production capabilities into its cloud infrastructure and applications to complement the traditional AI already built into them.
“Classical AI is very good at detecting patterns or predicting numbers … but you can’t use large language models to predict numbers,” Rondy Ng, executive vice president of application development at Oracle, told CNBC.
“So we combined the number prediction ability with the explained word ability. So the two together become very powerful and you need both. In the last many years, the number prediction part is already very mature. As part of the product we continue to evolve and there’s no stopping Generative AI is basically the talk of the town right now,” Ng said.
On March, Oracle announced additional AI creation capabilities integrated into applications in finance, supply chain, human resources, sales, marketing and services. AI capabilities can perform tasks such as generating financial reports and writing job postings, improving productivity and reducing business costs, Oracle said.
This comes after the company was announced implementing genetic AI across its entire technology stack in January.
“We believe Oracle is seeing a growth renaissance with its AI strategy. [It is] is well positioned to be a major beneficiary of the AI revolution,” Dan Ives, managing director of Wedbush Securities, said in emailed comments to CNBC on Wednesday.
“Oracle’s data and installed base gives Ellison & Co. a significant advantage in monetizing the AI software layer,” Ives said, referring to Oracle president and chief technology officer Larry Ellison.
As companies talked about genetic AI last year, technology providers need to be one step ahead of the curve, research firm Gartner said in a report on April 17. “They bring GenAI capabilities to existing products and services, as well as to use cases identified by their enterprise customers.”
JPMorgan said the creation of artificial intelligence and artificial intelligence could lead to increased IT spending and growth across the software landscape. “Several software vendors, including Oracle, reported benefits from continued business investments in artificial intelligence technologies,” JPMorgan analysts said in a March 12 note.
Oracle may see revenue growth and a positive impact on its stock if the company can capture a larger-than-expected share of artificial intelligence spending, the US investment bank said. Oracle shares are up 23.74% over the past 12 months, according to FactSet data.
“General AI services [are] basically a huge advantage compared to our competition. The competition has to work with different companies and cloud providers for that infrastructure and those kinds of services. We actually take everything in an integrated stack and consume it,” Ng told CNBC.
AI development
Oracle has been left behind by competitors such as Amazon, Microsoft and Google in cloud infrastructure services market share, according to Synergy Research Groupwhich ranked Oracle as the sixth largest service provider, along with IBM, worldwide.
While Oracle has been slow to build cloud infrastructure, the artificial intelligence boom has increased demand for the company’s AI technology. Ellison had 2018 rejected cloud computing as “complete nonsense”.
“Oracle followed the hyperscalers. [I think] this is not a competitive concern, say for the rest of 2024 and the foreseeable future. We are in the early stages of this new journey of genetic artificial intelligence,” said Ron Westfall, director of research at Futurum Group.
CEO Safra Catz said in March that the company added several “major new cloud infrastructure” contracts during the fiscal third quarter. Cloud revenue rose 25% year over year to $5.1 billion, Oracle said.
“Of interest to us are comments from management suggesting that the Oracle Cloud Infrastructure backlog is significant and AI is not yet truly driving revenue, which is expected to be more important in FY25,” Deutsche Bank analysts said on March 12 .
Ellison said in March that a Salt Lake City data center being built by Oracle could fit eight Boeing 747s nose to tail.
Determining future market opportunities, Ellison said he sees more national and state government applications running on platforms such as Oracle Cloud Infrastructure, and added that the company is negotiating sovereign territories with various countries.
“Another area [where Oracle] it’s ahead of the curve, although everyone’s jumping on it, it’s in terms of offering dominant cloud AI – a cloud that operates exclusively in one country,” said Westfall.
“More and more countries are going to say when it comes to the AI generation, we want all this information, all this data stored in the country.”
In April, Oracle said it would invest more than 8 billion dollars in Japan over the next 10 years to develop cloud computing and artificial intelligence infrastructure.
Oracle and Nvidia announced that they will be in March collaboration to deliver leading AI solutions to customers around the world.