Oracle shares rise 2.4% amid interest in new OpenAI model
Oracle shares rose 2.4% on Tuesday amid a positive response from users and technology experts to OpenAI's new ChatGPT-6 Astra model. Investors believe Oracle's prospects are closely tied to the success of the ChatGPT developer, MarketWatch reports.
Assessments of OpenAI's new model
OpenAI introduced ChatGPT-6 Astra last week. According to the publication, the online reaction indicates that the company is once again strengthening its position in the competition to create the best artificial intelligence models. Previously, models from Anthropic and Alphabet-owned Google also received recognition.
Morningstar analyst Luke Young said that Astra outperforms Anthropic's Fable model on several benchmarks. In his view, this boosts investor confidence in Oracle's OpenAI-related order backlog, meaning the volume of commitments that have not yet been recognized as revenue.
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Computing capacity contract
Young also noted that Astra's ability to operate a computer fully could open up new use cases and enable entire workflows that were unavailable to previous models. Astra is currently available only to a limited group of users. The analyst believes OpenAI's product breakthrough could increase demand for computing capacity and support Oracle's share price.
At the same time, investors are concerned about Oracle's high capital expenditures, including on data centers, its profitability, and its ability to finance obligations under contracts that cannot be canceled. In September last year, OpenAI signed a contract with Oracle to purchase $300 billion in computing capacity over five years. Oracle is due to release quarterly results on Thursday; several analysts expect strong growth in cloud revenue, although the scale of the company's own spending remains a concern.
