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 phone trade show opens its doors in Barcelona as the sector is looking 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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A cloud infrastructure provider in the US Oracle is increasing its AI generation capabilities as cloud competition intensifies and more companies turn to AI.

The AI ​​boom — fueled by the launch of chatbot ChatGPT in November 2022 — 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 vast sets from data.

Oracle is bringing generative AI capabilities to its cloud infrastructure and applications to complement the traditional AI already built into them.

“Classical AI is very good at finding patterns or predicting numbers … but you can’t use big language models to predict numbers,” Rondy Ng, executive vice president of application development at Oracle, told CNBC.

“So we combined the ability to predict numbering with the ability to explain with words. So the two together become very powerful and you need both. In the last many years, the number prediction part is now very mature. As part of the product, we continue to develop this and it won’t stop. Generative AI is basically the talking point right now,” said Ng.

In March, Oracle announced additional generative AI features embedded in applications in finance, supply chain, human resources, sales, marketing and service. AI’s generative capabilities can perform tasks such as generating financial reports and preparing job postings, improving productivity and reducing business costs, Oracle said.

This comes after the company announced the implementation of generative AI in its technology suite in January.

“We believe Oracle is seeing a renaissance of growth with its AI strategy. [It is] well positioned to be a major beneficiary of the AI ​​revolution,” Dan Ives, managing director at Wedbush Securities, said in emailed comments to CNBC on Wednesday.

“The data that Oracle sits on and the installed base gives Ellison & co. a big advantage for monetizing the AI ​​software layer,” Ives said, referring to Oracle chairman and chief technology officer Larry Ellison.

While companies talked about the generative story of AI last year, technology providers need to stay one step ahead of the curve, says a report from research firm Gartner on April 17. “They are bringing GenAI capabilities to existing products and services as well as use cases identified by their enterprise customers.”

JPMorgan said generative AI and AI could drive additional IT spending and growth across the software landscape. “Many software vendors, including Oracle, have pointed to the benefits of continued business investment in AI technologies,” JPMorgan analysts said in a March 12 note.

Oracle could see an increase in revenue and a positive impact on its stock if the company is able to capture a larger-than-expected share of AI spending, the US investment bank said. Oracle shares have jumped 23.74% over the past 12 months, according to FactSet data.

“Generative AI Services [are] basically a huge advantage compared to our competition. The competition has to work with different companies and cloud providers for this infrastructure and these types of services. We actually take everything in an integrated stack and consume it,” Ng told CNBC.

AI growth

Oracle lags behind rivals such as Amazon, Microsoft and Google in cloud infrastructure services market share, acc Synergy Research Groupwhich ranks Oracle as the sixth largest services provider, along with IBM, globally.

While Oracle was a latecomer to cloud infrastructure, the AI ​​boom has increased demand for the company’s AI technology. Ellison had in 2018 rejected cloud computing as “complete nonsense”.

“Oracle really followed the hyperscalers. [I think] this is not a problem for competition, say until the end of 2024 and for the foreseeable future. We’re at the very beginning of this whole new generative AI journey,” said Ron Westfall, director of research at Futurum Group.

CEO Safra Katz said in March that the company added several “major new cloud infrastructure contracts” in the fiscal third quarter. Cloud services revenue rose 25% year over year to $5.1 billion, Oracle said.

“Of interest to us is management’s commentary suggesting that the Oracle Cloud Infrastructure lag is significant and AI is not yet driving revenue, which is expected to be more significant in FY25,” Deutsche Bank analysts said on March 12 .

Ellison said in March that the Salt Lake City data center that Oracle is building could fit eight Boeing 747s nose to tail.

Outlining future market opportunities, Ellison said he sees more national and state government applications running on platforms like Oracle Cloud Infrastructure, adding that the firm is negotiating sovereign regions with a number of countries.

“Another area [where Oracle] is ahead of the curve, although everyone perceives it, is in terms of offering a sovereign AI cloud – a cloud that operates exclusively within a country,” Westfall said.

“More and more countries are going to say when it comes to generation AI, we want all this information, all this data to be kept domestically.”

In April, Oracle said it would invested more than 8 billion dollars in Japan over the next 10 years to grow cloud computing and AI infrastructure.

Oracle and Nvidia announced in March that they would be partnership to deliver sovereign AI solutions to customers worldwide.