Although content-generating tools such as ChatGPT and Dall-E have captured much of the artificial intelligence hype wave this year, Oracle executives assert that their AI developments are arguably “more important.”
Text-generating ChatGPT and image-generating Dall-E—both created by OpenAI, which has a multibillion-dollar investment from Oracle rival Microsoft—don’t have the same weight as Oracle’s AI systems for cancer, wellness, heart disease and other complex health-care subjects, Chairman and CTO Larry Ellison said on Thursday’s quarterly earnings call.
“People talk about ChatGPT being really cool because it can write my high-school essay for me,” Ellison said. “Well, how about reducing hospital readmissions at MD Anderson by 30 percent? You decide which is more important. … And GPT is very cool. There are other applications other than generative language in these large language models.”
Oracle’s Ellison Talks AI, ChatGPT, Cloud
Still, the embrace of AI overall has been a boon for Austin, Texas-based Oracle, Ellison said on the call while reporting revenue for the company’s third fiscal quarter ended Feb. 28.ADVERTISEMENT
“There’s actually more demand for AI processing than there is available capacity,” he said. “And we’re short. We are expanding as fast as we can. It’s really interesting. It’s an exciting opportunity. But it’s challenging when there’s more demand than supply.”
Ellison said that Oracle is actually “way ahead of the other hyperscalers in terms of our network and our ability to do AI.”
AI companies have come to Oracle because of the vendor’s ability to dynamically create clusters of GPUs, he said.
“They run their workload and the moment their workload is through running, we can reallocate that cluster or break that cluster up and allocate it to other users,” Ellison said. “The other guys can’t do that … can’t do it dynamically.”
Oracle also incorporates AI and automation into its regular offerings, including Oracle Cloud Infrastructure (OCI) data centers and the Oracle Autonomous Database, he said.
Oracle Fusion and OCI customers have had access to AI that shortens book closing to days from weeks, provides more relevant sales leads and improves security, Oracle CEO Safra Catz said on the call.
“Given our scale and our information advantage across industries and technologies, we are constantly training our applications to do more for our customers, whether it’s further automating processes, providing critical and timely recommendations, offering insight … or flagging potential issues,” she said. “That’s real enterprise AI. It’s what customers are looking for. It’s designed into everything we do.”
Oracle Dedicated Regions A Differentiator
Ellison said that another differentiator for the vendor is the ability to build dedicated regions instead of moving customers to a public cloud.
“We build these clouds for banks—huge industries moving to the cloud in a slightly different way than other industries,” he said. “Not moving to public cloud, but rather preferring to have these dedicated regions. So it’s just their applications in this cloud. We have the ability to do that. Again, Amazon does not. And Microsoft does not. And Google does not.”
CRN has reached out to Microsoft, Amazon Web Services and Google for comment.
Although Oracle saw a slight miss in expected revenue for the quarter—$12.40 billion compared with $12.41 billion, according to Bloomberg—an analyst on the earnings call asked Ellison and Catz why Oracle hasn’t reported the same business slowdown as competitors.
Ellison said that Oracle’s Gen 2 Cloud differs from the clouds of hyperscalers Google, AWS and Microsoft with its non-blocking remote direct memory access (RDMA) network.
“Our network is much faster than the other guys’ network,” he said.
“We can create these groups of GPUs. We can marshal them together. The other guys can’t do that. They can build clusters, but they actually literally are physically building a new cluster. They’re building new hardware. Our existing hardware, standard network, allows us to group these things together dynamically—these GPUs together dynamically to attack AI problems. No one else can do this.”
Oracle Third-Quarter Results
Oracle saw total revenue of $12.4 billion during the quarter, an increase of 21 percent year over year ignoring foreign exchange rates.
Cerner contributed $1.5 billion to that total.
Cloud services and license support brought in $8.9 billion for the quarter, up 20 percent year over year ignoring foreign exchange rates. Cloud applications, Autonomous Database and the second-generation OCI applications drove this revenue, Catz said.
Cloud license and on-premises licenses brought in $1.3 billion, up 4 percent year over year ignoring foreign exchange rates.
“Cloud is no longer about just renting commodity white boxes, “ Catz said. “It’s about velocity and value. We have become the enterprise technology vendor of choice because we have products and services that help our customers drive cost efficiencies and modernize their businesses.”
Cloud revenue for the quarter was $4.1 billion, up 48 percent year over year ignoring foreign exchange rates.
Within cloud revenue, Infrastructure as a Service brought in $1.2 billion, up 57 percent year over year ignoring foreign exchange rates. Cloud application and Software-as-a-Service revenue was $2.9 billion, up 44 percent year over year.
Fusion Cloud ERP brought in $700 billion during the quarter, up 28 percent year over year ignoring foreign exchange rates. NetSuite Cloud ERP brought in the same amount, an increase of 26 percent year over year.
Oracle reported $3.3 billion in operating income based on GAAP. GAAP net income was $1.9 billion.
Oracle’s stock traded at about $83 a share, down about 4 percent since market close Thursday.
Oracle’s Fourth-Quarter Forecast
Catz said on the call that she expects revenue in the fourth fiscal quarter to grow 17 percent to 19 percent ignoring foreign exchange rates.
Total cloud growth should grow 51 percent to 53 percent. Excluding Cerner, it should grow above 30 percent, she said.
When asked why she’s confident in Oracle’s organic cloud growth for the year, Catz credited the company’s growing data center count.
“As they become available, we have customers waiting to get started and use them,” she said. “So we have commitments from customers to quite an enormous amount of consumption. And so they’ve basically been waiting for us. We’ve taken a while in all these different countries to open these data centers and to make them available to our customers. And so we know they are actually very impatient to use the capacity as it becomes available.”LEARN MORE: Cloud Infrastructure | Cloud Platforms | Cloud Software | AI | Machine Learning | Database and System Software
Wade Tyler Millward is an associate editor covering cloud computing and the channel partner programs of Microsoft, IBM, Red Hat, Oracle, Salesforce, Citrix and other cloud vendors. He can be reached at [email protected].
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