Oracle’s stock took a hit despite positive news surrounding artificial intelligence in recent days. Despite a 0.5% increase to $141.44 on Wednesday morning, the shares are down nearly 3% from their peak on Tuesday. However, the S&P 500 and Dow Jones Industrial Average saw modest gains on Wednesday. The initial boost in Oracle’s stock came after the announcement that Palantir’s Foundry platform and AI platform were now available on Oracle’s cloud-based infrastructure. This indicated a significant increase in AI-related business for Oracle.
However, the news that Elon Musk’s xAI would be taking over some AI processing in-house caused a decline in Oracle’s stock. Musk explained that xAI needed faster processing capabilities for Grok, a large language model similar to OpenAI’s ChatGPT. Despite this setback, the overall trend shows that the demand for AI services is growing, and there is a lack of processing power to meet that demand.
An analyst from Jefferies, Brent Thill, remained optimistic in a recent report, stating that the xAI deal would not impact Oracle’s financial guidance and that the company continues to see robust demand for AI services. Thill rates Oracle shares as a Buy with a price target of $150, predicting a significant increase in sales by 2026.
The growth in AI computing is expected to continue as more companies adopt AI models to streamline operations and improve customer experiences. This trend will lead to more business for companies like Oracle. Furthermore, the competition in AI infrastructure is still in its early stages, as evidenced by the recent news about Palantir and xAI.
Nvidia, a major player in AI infrastructure with its chips, has seen significant stock growth over the past five years, reflecting its success in this market. As the demand for AI computing continues to rise, companies like Nvidia are likely to benefit from this trend.
In conclusion, despite the recent fluctuations in Oracle’s stock, the overall outlook for the company and the AI industry remains positive. The increasing demand for AI services presents opportunities for growth and innovation in the coming years, benefiting not only Oracle but also other companies in the AI sector.
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