Oracle’s stock is set for its biggest post earnings pop in years.
The trigger for that?
A single, staggering metric: Remaining Performance Obligations (RPO) soaring to $455 Billion.
That nearly half a trillion dollars!
And this number highlights one specific facet of AI.
And it’s not ‘training’.
It’s a vote of confidence (from some of Oracle’s biggest clients) that ‘inferencing’ will draw some of the largest AI-related spends over this decade.
Since early-2023, we have all been captivated by the AI-trained LLMs (Chat GPT, Gemini, Grok, Llama).
Larry Ellison, on the earnings call, was pretty clear about why inferencing could be a bigger deal for long-term AI evolution.
Here is what he said:
“Training AI models is a gigantic multi-trillion-dollar market. It’s hard to conceive of a technology market as large as that one. If you look closely, you can find one that’s even larger. It’s the market for AI inferencing. Millions of customers using those AI models to run businesses and governments.
In fact, the AI inferencing market will be much, much larger than the AI training market”
And why is inferencing bigger?
A simple way to look at this would be:
The training phase is when you show an AI model thousands of pictures of cats and dogs. The AI model studies them, learn the patterns (ears, whiskers, paws), and eventually figure it out. This phase is undeniably expensive and time-consuming.
Inferencing is when you want to use AI, and so it’s that moment when you ask, “Is that a cat or a dog?”
This is the entire point of the training (and of AI)
Inference happens every time …
– Every time you ask ChatGPT a question
– Every time Netflix recommends a show
– Every time your phone unlocks with face ID
That explains the post earnings pop because Oracle, by virtue of being the world’s largest custodian of high-value private enterprise data, is undeniably in pole position to corner inferencing capacity.
Ps: There is no word in the English language for the opposite of ‘Oracle’.
Maybe there is.
‘Jim Cramer’ perhaps?
But hang on … who do you see taking a victory lap today?
