Dive Brief:
- Oracle Chairman and CTO Larry Ellison touted the advantages of private cloud for enterprises concerned about cybersecurity and data sovereignty, speaking Monday during the company's Q1 2025 earnings call.
- “We expect that private clouds will greatly outnumber public clouds,” Ellison said. “They're becoming so inexpensive that anyone can decide, ‘OK, I want to move to the cloud. I want all the advantages in the cloud, but I want to make sure that I'm the only one in the cloud.’”
- Oracle saw its cloud revenue increase 21% year over year to $5.6 billion for the three-month period ending Aug. 31. The company expanded its public cloud footprint over the last year through hyperscaler alliances that place Oracle database infrastructure inside AWS, Microsoft Azure and Google Cloud data centers.
Dive Insight:
As enterprises added generative AI capabilities to the business transformation playbook, cloud providers doubled down on high-capacity chips and infrastructure, straining capacity and triggering an infrastructure building boom.
Oracle embarked on an AI-fueled spending spree before the start of the year, vowing to expand compute capacity at the 66 data centers it operated at the time and add 100 more.
The strategy has paid off. In June, Microsoft tapped Oracle to scale up its Azure OpenAI business, adding the ChatGPT-based service to a list of AI clients that included Nvidia, Twelve Labs and Modal.
Oracle now has 162 cloud data centers live and under construction globally, according to Ellison.
Unrelenting demand for cloud-based AI compute continues to drive Oracle’s expansion strategy, CEO Safra Catz said Monday. “Demand is still outstripping supply, but I can live with that because we are laying out a lot of supply,” she said.
The building activity is reflected in the company’s spending patterns. Oracle increased capital expenditures by 75% year over year to $2.3 billion and plans to double that, Catz said.
Data center investments also helped make Oracle a cloud-first vendor. The company reached a major milestone earlier this year, as cloud revenues exceeded software support revenues for the first time during the three-month period ending Feb. 29.
As generative AI use cases stoke enterprise cyber and data security concerns, Oracle sees private cloud as a prudent alternative to hyperscaler offerings.
“Our private clouds are identical to our public clouds, except for the fact they might only have one tenant,” Ellison said. “We own the hardware. We manage the hardware for you. It just happens to be in a building you own — and you're the only one that can get in.”
