Pentagon sends $7 billion in orders, Oracle rises about 3% after hours
The U.S. Department of Defense announced Thursday it signed a blockbuster 10-year contract with Oracle worth approximately $7 billion. For this veteran software company that has been ignored by investors this year, this order is a "timely rain". Boosted by the news, Oracle's stock price rose about 3% in after-hours trading. Contract Details According to a statement from the U.S. Department of Defense, this contract covers the local deployment and use of Oracle software in internal data centers of various U.S. military services, U.S. intelligence agencies, and the Coast Guard. The contract has a base period of five years, with an additional five-year extension option.
The U.S. Department of Defense announced Thursday it signed a blockbuster 10-year contract with Oracle worth approximately $7 billion. For this veteran software company that has been ignored by investors this year, this order is a "timely rain". Boosted by the news, Oracle's stock price rose about 3% in after-hours trading. According to a statement from the U.S. Department of Defense, this contract covers the local deployment and use of Oracle software in internal data centers of various U.S. military services, U.S. intelligence agencies, and the Coast Guard. The contract has a base period of five years, with an additional five-year extension option. Oracle has a long history of cooperation with government departments, and the US Central Intelligence Agency (CIA) is the first customer in Oracle's history. U.S. Department of Defense officials said that improving the procurement process for locally deployed Oracle products could save at least $441 million. The Pentagon awarded this contract in the name of "saving money" at a time when the United States was "burning" military expenditures on foreign wars. Earlier this week, U.S. Defense Secretary Hergseth estimated that the U.S.-Iran war has cost the U.S. $37.5 billion since it broke out in February. In addition, before reaching this contract, the US Department of Defense signed an agreement with Microsoft in May this year. At the time, Microsoft was awarded a five-year, $9.69 billion contract to consolidate Microsoft and its enterprise software licenses scattered across the military services, intelligence agencies and Coast Guard into a single contract. Despite the blockbuster contract, Oracle's overall performance this year is still not optimistic. Oracle's stock price has fallen 38% this year as investors worry that AI may erode the growth prospects of traditional software companies. At the same time, Oracle is taking on tens of billions of dollars in debt to build large-scale AI data centers. Quarterly data released by Oracle in June showed that its software revenue fell 2% year-on-year, but its cloud business revenue climbed 47% as the company stepped up its efforts to provide AI computing power support to customers such as OpenAI. Oracle co-founder Larry Ellison has long been a staunch supporter of Trump and has reportedly donated $45 million to nonprofits supporting Trump's 2024 presidential campaign. Ellison was also one of the first business leaders to visit the White House during Trump's second term, announcing plans to build a "Stargate" artificial intelligence data center in the United States. In May this year, the U.S. Department of Defense also reached relevant agreements with Oracle and other technology companies on the deployment of AI in classified networks.