shares are tearing up – 8% up this week, 13% over the last six trading days and 37% in the previous year.
And Friday was more of the same: Oracle shares (ticker: ORCL) jumped 2.5% to $ 87.76, a new high. For the first time, the software company is approaching a market value of $ 250 billion.
Give the Pentagon partial credit for the demonstration.
The Ministry of Defense on Tuesday canceled its 10-year JEDI cloud computing contract with 10 billion with
(MSFT), as both Oracle and
(AMZN) had been relentlessly challenging in court. And DoD is launching a new replacement project that Oracle may be able to bid on.
Oracle is moving a growing part of its database and application business to the cloud, which Barrons reported in February. The shift has set the stage for a re-acceleration of growth in the top line. A few weeks ago, Oracle reported financial results in the May quarter, showing 8% top-line growth, the largest increase in a decade.
Its Oracle Cloud Infrastructure grew more than 100% in the May quarter. In addition, the company has had some markup gains, especially the video conferencing companies
8 × 8
Oracle Cloud still lags far behind Amazon Web Services, Microsoft Azure and Google Cloud, the giants of the growing public cloud services market. But being a Pentagon player would change that.
The Ministry of Defense’s new project, called Joint Warfighter Cloud Capability, will be what the agency describes as a “multi-cloud / multi-vendor” contract. The government said it would seek proposals from “a limited number of sources” and noted that only Microsoft and Amazon appear to meet the department’s requirements.
But – and this is a big but – the department also said it “will immediately engage with the industry” and continue to investigate whether other US-based cloud players can also meet the requirements. “In that case, the department will also negotiate with these companies,” the agency said.
And there is a ray of hope for Oracle, which for years has said its own cloud meets the government’s technical requirements. CEO Safra Catz recently told reporters in Israel that she spoke with the Pentagon’s IT staff after Tuesday’s announcement and that “there is a readiness to look into the matter again.”
While a partial gain for Oracle on the new contract may not move the needle much in terms of top-line growth, it would certainly be a huge statement about the company’s ability to compete with AWS and Azure. And while that hasn’t happened yet – it’s not even clear that Oracle really meets all the DoD requirements for the job – investors seem to be fascinated.
Write to Eric J. Savitz at firstname.lastname@example.org