Oracle's incredible cloud-infrastructure guidance is pushing CoreWeave stock higher today.
Massive growth for Oracle's cloud infrastructure unit bodes well for CoreWeave.
CoreWeave is a risky stock, but its growth outlook appears promising.
CoreWeave (NASDAQ: CRWV) stock is surging higher in Wednesday's trading. The artificial intelligence (AI) company's share price was up 15.2% as of 3:15 p.m. ET and had been up as much as 24.6% earlier in the day.
The big gains for CoreWeave stock today are being powered by Oracle's latest earnings report and guidance. While the company's sales and earnings performance fell short of Wall Street's expectations in its most recent quarter, management issued astounding guidance for cloud infrastructure sales growth.
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Oracle expects sales for its cloud infrastructure business will expand 77% to reach $18 billion in the current fiscal year. From there, the company is forecasting jumps to $32 billion, $73 billion, $114 billion, and $144 billion in the following four fiscal years. A recent report from The Wall Street Journal also stated that OpenAI has signed a five-year contract with Oracle worth as much as $300 billion for data center services.
Trading at roughly 10.8 times this year's expected sales, CoreWeave has some strong growth already priced into its stock. On the other hand, recent news surrounding Oracle seems to confirm that the smaller AI specialist is operating at the intersection of markets that are poised to see tremendous growth over the next five years.
Despite today's big rally, CoreWeave stock still trades down roughly 37% from its high -- with the valuation pullback stemming in part from investor disappointment surrounding some of the company's recent acquisition moves. While the stock remains a high-risk investment play, the big news about Oracle's AI cloud infrastructure outlook could be a worthwhile buying catalyst for risk-tolerant investors.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.