NEW YORK – Oracle gave investors a boost by saying the company’s cloud computing business will continue to grow rapidly in the coming fiscal year after a strong performance in the past quarter.

Shares, which had jumped to a record high at the close, rose another 3 per cent in extended trading.

Cloud sales gained 54 per cent in the fiscal fourth quarter to US$4.4 billion (S$5.91 billion), after a 45 per cent jump in the previous period.

In the fiscal year ending May 2024, cloud revenue should increase at least as much as in the year that just ended, chief executive Safra Catz said on a conference call after the results.

Guggenheim Securities analyst John DiFucci said the continued strength in the unit is abnormal given the current economic environment.

Austin, Texas-based Oracle has focused on expanding its cloud infrastructure business to more forcefully compete with market leaders Amazon and Microsoft, which have seen recent slowdowns.

A boom in generative artificial intelligence (AI), which needs tremendous computing power, is boosting demand for Oracle’s cloud services, executives said.

Generative AI start-up Cohere said last week that Oracle was among its investors in a US$270 million funding round.

Wrote Barclays analyst Raimo Lenschow after results: “We see shares maintaining their recent positive momentum as the narrative of growing cloud momentum, partly fuelled by AI demand, remains intact.”

In a statement on Monday, Oracle said cloud infrastructure revenue increased 76 per cent to US$1.4 billion in the period ended May 31, while cloud application sales jumped 45 per cent to US$3 billion.

Oracle chairman Larry Ellison said in the statement that more than US$2 billion in cloud capacity has recently been contracted by companies doing large language model development such as Mosaic ML, Adept AI and Cohere.

“Oracle’s Gen2 Cloud has quickly become the No. 1 choice for running generative AI workloads,” he said.

Total sales increased 17 per cent to US$13.8 billion in the quarter.

Analysts, on average, estimated US$13.7 billion, according to data compiled by Bloomberg.

Profit, excluding some items, was US$1.67 a share, compared with the average estimate of US$1.58.

“Both of our two strategic cloud businesses are getting bigger – and growing faster,” CEO Ms Catz said in the statement. “That bodes well for another strong year in financial year 2024.”

Shares hit a high of US$122.87 in extended trading after closing at a record US$116.43 in New York.

Oracle has rallied 42 per cent in 2023, compared with the 32 per cent rise in the iShares expanded software ETF.

Oracle’s other big bet – the acquisition a year ago of digital health records provider Cerner, now called Oracle Health – generated US$1.5 billion in the quarter.

Oracle began cutting jobs in the division earlier in 2023 after executives promised to improve profitability.

In the current period ending in August, cloud growth excluding Oracle Health will be about 29 per cent, Ms Catz said.

Total revenue is expected to increase 8 per cent to 10 per cent, she said.

Analysts, on average, projected an 8 per cent gain.

Profit, excluding some items, will be US$1.12 to US$1.16 a share. 

Much of Oracle’s cloud revenue is produced by business applications such as Fusion software for managing corporate finances and NetSuite’s enterprise planning tools, which are targeted at small and medium-sized enterprises. BLOOMBERG