Oracle (ORCL) shares rose 11% in premarket trading on Wednesday after the company reported stronger-than-expected results and allayed concerns about a looming “SaaS apocalypse,” easing investor concerns about artificial intelligence disruption and near-term debt financing.
According to the Wall Street Journal, revenue increased 18% to $17.19 billion, exceeding analysts’ forecast of $16.92 billion. Cloud revenue increased 41%, while cloud infrastructure sales increased 81%, highlighting strong demand related to artificial intelligence.
Management used the earnings call to directly address concerns that generative AI could harm traditional software vendors. Executives took the opposite view, saying customers want AI embedded directly into mission-critical systems rather than replacing them with standalone tools.
The results also help ease concerns about Oracle’s balance sheet after the company said it planned to raise up to $50 billion in debt and equity to fund artificial intelligence infrastructure. Oracle said it had raised $30 billion through investment-grade bonds and mandatory convertible preferred stock, and demand was severely oversubscribed.
Oracle’s gains also sent the iShares Expanded Tech-Software Sector ETF (IGV), the fourth-largest holding, up about 1% in premarket trading. The move contrasts with Bitcoin, which fell about 0.5% ahead of U.S. CPI data, suggesting the tight correlation between software stocks and Bitcoin may be easing.
The two became close earlier this year. IGV is down about 34% from its October high, a decline that coincides with Bitcoin’s roughly 50% correction as software stocks and cryptocurrencies sell off simultaneously.