Oracle and Amazon Web Services announced a strategic partnership to complete CTO Larry Ellison's multicloud trifecta. Oracle first partnered with Microsoft Azure, then Google Cloud and now AWS. Oracle also delivered strong cloud revenue growth in the first quarter. 

The two cloud providers launched Oracle Database@AWS, which allows customers to access Oracle Autonomous Database on dedicated data centers and Oracle Exadata Database Service within AWS.

Oracle said Oracle Database@AWS will unify Oracle Cloud Infrastructure (OCI) and AWS for database administration, billing and customer support. Enterprises will also be able to connect enterprise data in Oracle to applications running on Amazon EC2, analytics services and AI services including Amazon Bedrock. Procurement will be simplified through AWS Marketplace so enterprises can purchase Oracle Database services using their AWS commitments and existing Oracle licenses. Big software deals closing on AWS Marketplace, rival efforts

In addition, Oracle CTO Larry Ellison and AWS CEO Matt Garman will talk about the partnership on Tuesday at Oracle CloudWorld. The partnership is part of Oracle's broader multicloud strategy. Oracle Database@Google Cloud, which was announced last quarter, is now generally available. Multi-cloud computing isn't 'a bunch of separate clouds'

"We are seeing huge demand from customers that want to use multiple clouds," said Ellison. "To meet this demand and give customers the choice and flexibility they want." Garmin added that the partnership will give joint customers more flexibility and scalability.

Ellison said Oracle's cloud business is benefiting from its Nvidia GPU clusters as well as autonomous database. "Our large and loyal customer base understand and appreciate the many technical advantages of using the Oracle database, and those customers wanted us to find a way to make the very latest and best Oracle technology available on other cloud," said Ellison. "We believe our cloud partnerships with AWS and Microsoft and Google will turbocharge the growth of our database business for years to come."

The Universal Database Versus a Suite of Specialized Databases

Oracle Database@AWS will be available in preview later this year with broader availability in 2025. For Oracle, the AWS deal is big since it now can offer its database services across every hyperscale cloud.

Key items about the partnership include:

  • Direct access between Oracle database services and AWS will be provided via a low latency network connection.
  • AWS customers will be able to use Oracle Autonomous Database seamlessly.
  • Zero-ETL integration will run between Oracle Database services and AWS Analytics services.
  • Oracle database services will seamlessly be integrated with Amazon S3.
  • Oracle Database@AWS can be launched via the Amazon Management Console, Command Line Interface and AWS CloudFormation.

Fidelity, Best Buy and State Street were among the joint customers touting the partnership.

Ellison said the AI race is a marathon not a sprint and it requires all parts of the data center. 

"This race goes on forever to build a better neural network. And the cost of that training gets to be astronomical. When I talk about building gigawatt or multi-gigawatt data centers, I mean these AI models, these frontier models are going to -- the entry price for a real frontier model from someone who wants to compete in that area is about $100 billion. Let me repeat, around $100 billion. That's over the next four, five years for anyone who wants to play in that game. That's a lot of money. And it doesn't get easier."

"Let me say something that's going to sound really bizarre. Well, I probably -- you'd probably say, well, he says bizarre things all the time. So why is he announcing this one? It must be really bizarre. So we're in the middle of designing a data center that's north of the gigawatt that has -- but we found the location and the power place. We look at it, they've already got building permits for three nuclear reactors. These are the small modular nuclear reactors to power the data center. This is how crazy it's getting. This is what's going on."

Separately, Oracle announced first quarter earnings of $1.03 a share on revenue of $13.3 billion, up 7% from a year ago. Non-GAAP earnings in the first quarter were $1.39 a share, 6 cents a share better than estimates.

By the numbers:

  • First quarter cloud revenue was $5.6 billion, up 21% from a year ago.
  • Cloud infrastructure revenue was $2.2 billion, up 455 from a year ago.
  • SaaS revenue was $3.5 billion, up 10% from a year ago.
  • Cloud ERP revenue was $900 million, up 16% and NetSuite first quarter revenue was also $900 million, up 20%.

Oracle CEO Safra Catz said cloud services are now the company's largest business and operating income and earnings growth are accelerating.

Ellison added that Oracle now has 162 cloud data centers. In the first quarter, Oracle signed 42 additional GPU contracts valued at $3 billion. Oracle has 7 OCI regions live at Microsoft with 24 more being built and 4 with Google Cloud with another 14 on tap.

As for the outlook, Catz said Oracle's database business will accelerate with all of the hyperscalers in the mix. Catz said:

  • Oracle spent $2.3 billion in capital expenditures in the first quarter. Fiscal 2025 capex will be double 2024. 
  • "We remain very confident and committed to full year total revenue growth growing double digits and full year total cloud infrastructure revenue growing faster than last year."
  • Total revenue in the second quarter will 7% to 9%. Cloud revenue will grow 23% to 25%. 
  • Non-GAAP earnings in the second quarter will be between $1.42 a share to $1.46 a share. 

Constellation Research's take

Constellation Research analyst Holger Mueller said:

"Oracle had another very good quarter. Its Q1 is traditionally a sluggish quarter dating back in the on premises days, and the strength shows Oracle's transition to services and subscriptions. All regions grew as well which demonstrates the global appeal of the Oracle offering portfolio.  Oracle is building a lot of datacenters, buying a lot of GPUs and now partnering with AWS along with Google and Microsoft. All of those partnerships require CAPEX to put the Exadata machines where they need to be for an attractive customer experience.

Oracle invested close to $8 billion in CAPEX in Q1, but at a lower rate of using free cash flow (it was 47% now down to 41% - but Oracle added almost $1.5B to cash flow). With a build out of a total of 31 datacenters planned for Microsoft (7 live, 24 to be built), 18 planned for Google (4 live and 14 to be built), and an amount to be built for AWS, Oracle will have to keep investing. 

No wonder infrastructure revenue grows with 45%, with Oracle Cloud ERP growing a respectable 16% and NetSuite revenue growth at 20%. Those are very good growth rates during uncertain overall economic times. Oracle has never been closer to the original Larry Ellison vision of becoming the IBM of the 21st century and providing all that enterprises need across the stack – from the hardware to SaaS – with a strong commitment to compete in the multicloud. 

Lastly it is clear that competition to unseat Oracle as the leading transactional, mission critical relational database has folded, AWS was the last competitor standing. The future is coopetition now. Oracle can’t rest on its laurels, as it needs to keep enterprise data in its databases, delivering strong on vector search (bringing AI to the database) and strong and easy uptake of RAG (allowing data to stay in the database for validation)." 

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Data to Decisions, Tech Optimization

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@Oracle, @aws, #GenerativeAI, #database, hyperscale data centers