Oracle Corporation (ORCL.US) shows its "trump card" in AI: Gross profit margin of $60 billion project can reach 35%, with a revenue target of $225 billion for fiscal year 2030.

Oracle Corporation (ORCL.US) announced the gross margin expectations for a large artificial intelligence infrastructure project, easing some concerns on Wall Street about the profitability of this key new business division. During an investor presentation at the annual conference in Las Vegas on Thursday, Oracle Corporation stated that for example, for an artificial intelligence workload infrastructure project (such as data centers) generating a total revenue of $60 billion over six years, the gross margin would reach 35%. Gross margin refers to the percentage of revenue left after deducting the cost of goods and services production. Co-CEO Clay Magouyrk, in discussions with analysts, mentioned that the gross margin level in the example "even for the largest customers, has reference significance". After the disclosure, Oracle Corporation's stock price rose nearly 6% at one point, ultimately closing up 3.1% at $313. However, after the company later released long-term revenue and profit forecasts on Thursday evening, its stock price dropped about 2% in after-hours trading. Oracle Corporation has signed several large agreements to develop artificial intelligence data centers for clients like OpenAI, Meta (META.US), and Elon Musk's xAI. While these orders have boosted the company's valuation, investors have expressed concerns about the profitability of these related businesses. Analyst Anurag Rana noted that the newly disclosed information "helps alleviate market concerns over declining profitability". According to reports from last week, the gross margin for some of Oracle Corporation's artificial intelligence cloud business collaborations was only 14%. Rana wrote, "Given that this business is still in the early stages, profitability is likely to improve significantly in the coming years." Oracle Corporation also stated that it expects annual revenue for the fiscal year 2030 to reach $225 billion, surpassing the average analyst expectation of $198 billion. The company predicts that adjusted earnings per share will reach $21 by the fiscal year 2030, also higher than the average analyst expectation of $18.50. Last month, Oracle Corporation disclosed that out of the $225 billion revenue projected for the fiscal year 2030, $144 billion would come from cloud infrastructure business sales.