Investors applauded a rise in demand for Oracle’s relatively inexpensive cloud infrastructure services from artificial intelligence applications, which led to a nearly 9% increase in the company’s shares.

The company’s market capitalization, which was $340 billion as of Tuesday’s market closing, will increase by more than $28 billion if the increases continue. The shares have increased by 18% so far this year.

Oracle has been expanding its cloud infrastructure business, which is anticipated to drive development by providing businesses with cloud computing and storage services. However, Alphabet’s Google, Microsoft, and Amazon.com are likely to compete with Oracle.

Presented as a more cost-effective alternative to its competitors, Elon Musk’s xAI and other venture capital-funded generative AI businesses have shown interest in doing business with Oracle because of its cloud architecture.

Oracle said on Tuesday that it has partnered with Google Cloud and OpenAI, the company that makes ChatGPT, to provide its own cloud infrastructure to clients.

“The announcement that OpenAI will now be using OCI (Oracle Cloud Infrastructure) only adds to Oracle’s credibility as an AI platform and the new relationship with Google also broadens the company’s distribution for its database,” Kirk Materne, an analyst at Evercore, wrote in a note

Under the cooperation, OpenAI may leverage Oracle’s infrastructure for use cases requiring Microsoft’s Azure platform. Meanwhile, the ChatGPT creator stated that Microsoft-built supercomputers are being used to train the company’s new language learning models.

Oracle’s stock was selling at a lower multiple of 19.59 to its projected future profits, compared to Amazon.com’s 36.35, Microsoft’s 32.60, and Alphabet’s 21.85.

The company’s fourth-quarter earnings, released on Tuesday, fell short of projections due to competition from less costly solutions in its legacy database and enterprise resource planning software division.

“We suspect there is ample churn off of Oracle software to competing database and ERP software firms due to the eroding switching cost argument amid massive digital transformations,” said Morningstar analyst Julie Sharma, referring to watchdogs set to make their move in the United States.

(Adapted from Reuters.com)