High-flying Oracle reports fiscal-Q4 and full-year earnings tomorrow, and based on the booming RPO numbers Oracle has been posting the past few quarters, it could very well overtake Google Cloud as the world’s fastest-growing major cloud vendor.
The battle for the top spot on the Cloud Wars Growth Chart comes amid scattered rumors and hand-wringing over “data-center overcapacity” and unfounded reports that the four hyperscalers are pulling back on their unprecedented data-center buildouts.
As I’ve analyzed extensively, those baseless reports run contrary to the publicly stated reports from not only Oracle and Google Cloud but also Amazon and Microsoft — that their quarterly revenues would have been higher if they had been able to meet surging customer demand. For a glimpse at that situation, check out “Microsoft Obliterates ‘Data Center Overcapacity’ Fantasy with Another RPO Blowout.”
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On the subject of RPO blowouts, Oracle pulled a stunner when in early March it announced that for its fiscal Q3 ended Feb. 28, RPO surged 63% to $130 billion, far surpassing prior quarters of 48% and 49%. Because that contracted RPO business translates over time into revenue, I think that when Oracle discloses Q4 results on Wed., June 11, we might see cloud-revenue growth move from the 23% it reported for Q3 to something in the range of 27% or even 28%.
That possibility takes on extra credibility when we consider that Q4 is always the biggest for Oracle. But even with that dynamic at play, I think the real impetus for Oracle to post higher growth rates is the exceptional performance it has shown in RPO for the past year — it’s about time for some of those beefy contracts for Oracle Cloud Infrastructure to migrate over to the revenue column.
Over at Google Cloud, Q1 revenue was up 28% to $12.3 billion as parent company Alphabet said customer demand for its cloud services once again outstripped available capacity. So as noted above, the issue isn’t flagging customer demand — rather, it is the hyperscalers’ difficult but eagerly embraced challenge of building out on a global scale of what NVIDIA CEO Jensen Huang called “AI factories” to power the AI economy.
Final Thought
I’m betting that tomorrow, Oracle will post Q4 cloud-revenue growth of 29% to almost $7 billion, and RPO growth of 54% as proof of the enormous customer demand for its OCI services, particularly AI training.
If Oracle is able to post that huge jump in sequential-quarter revenue growth — from 23% to 29% — it will bump Google Cloud out of the #1 spot on the Cloud Wars Top 10 growth chart. Oracle will hold that spot at least until late July, when we’ll hear from Alphabet how Google Cloud did in Q2.
And don’t overlook SAP, which for Q2 grew 25% — I guess there’s still plenty of life in those so-called “legacy” companies!
