Oracle Corp (NYSE:ORCL, ETR:ORC) shares surged after the cloud technology firm announced a new partnership with Amazon Web Services (AWS), Amazon.com Inc (NASDAQ:AMZN)'s Cloud division, called oracleDatabase@AWS which will connect Oracle’s databases with AWS applications.
Database@AWS will be rolled out in 2025 and will run on dedicated infrastructure to provide a low-latency bridge between the two Clouds.
“AWS customers would benefit from more seamless access to their data, simplified database administration, billing (customers will be able to purchase Oracle services on the AWS Marketplace with existing commitments), and unified customer support,” Bank of America analysts highlighted in a note to clients.
Analysts noted Oracle’s commentary that partnerships with leading Cloud providers are already driving growth from customers who want to use multiple Clouds.
They continue to see Cloud demand as a top AI play that should benefit all leading Cloud providers.
“Oracle and Amazon had been competitive for database customers, so new partnership suggests companies have a lot to gain by working together,” they wrote in a note to clients.
“We think all Cloud providers have a sizable opportunity to unlock demand for infrastructure/applications using data housed within Oracle's databases.”
Meanwhile, AWS CEO Matt Gorman spoke at an investor conference on Tuesday, which featured “constructive” commentary on AI.
“Gorman noted proliferation of GenAI has helped shift customer focus from cost reduction/optimization over the last 18 to 24 months toward investment in innovation,” analysts wrote.
“Many customers will see ROI on AI spend through efficiency gains in the near term (such as call center efficiencies), but that is just scratching the surface with areas like biotech innovation and fraud detection likely to see material advances.”
Gorman was positive on the cost-saving potential of its Gravitron and Trainium AI chips but balanced this discussion by noting AWS’ strong partnership with chipmaker Nvidia.
“Despite concerns on AI-related disruption to AWS' strong Cloud industry position, commentary suggests optimism on AI-related demand and differentiated AWS AI infrastructure to drive client wins,” the bank’s analysts wrote.
“Also, Amazon is walking a fine line between promoting its own cost-efficient infrastructure, and featuring Nvidia's strong GPU capabilities, but believes customer choice is a differentiated and compelling offering.”
Following these updates, the analysts repeated their ‘Buy’ rating on Amazon and awarded it a $210 price target.
Amazon shares traded up 1.4% at about $178 in the early afternoon on Tuesday. Shares of Oracle had surged 12.6% to $157.50.