Oracle ORCL bagged a deal from Japan-based car marker Nissan to migrate the latter’s high-performance computing (HPC) workloads to Oracle Cloud Infrastructure (OCI).

OCI is powered by Intel’s Xeon based bare-metal infrastructure integrated with RDMA cluster networking. This provides latencies of under two microseconds and 100Gbps bandwidth that allows enterprises to swiftly migrate large scale HPC data to the cloud.

Apart from this, OCI also supports variety of Independent Software Vendors (ISV) applications ecosystem for domains like structural simulations and Computational Fluid Dynamics (CFD). This is beneficial for Nissan as it deploys structural simulation and CFD techniques to design cars and conduct safety-test of its cars for structural failures and external aerodynamics.

Oracle’s HPC Solutions will help Nissan to run HPC workloads on demand, thereby eliminating the need for buying fixed, on-premises capacity and consequently, reduce operational costs.

Nissan’s deal is a notable win for Oracle as it reflects on strength of the company’s cloud platform and is anticipated to boost the company’s cloud revenues in the coming quarters. A few days back, Oracle had also launched Oracle Cloud VMware Solution, which will enable businesses to seamlessly move their VMware workloads to OCI.

Expanding Clientele Bodes Well for Cloud Business

Oracle is gaining ground in the cloud services market. Both its software-as-a-service and platform-as-a-service products are expected to grow in the days ahead as enterprises rapidly transition to the cloud, triggered by coronavirus-led work-from-home wave.

Also, the company is making efforts to improve functionalities of cloud-based applications, which is encouraging adoption. These initiatives are expected to provide Oracle an edge in the database-as-a-service market.

The company has bagged many cloud deals in the past few months. The expanding client list bodes well for growth of Oracle, currently carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earlier this year, companies like 8×8 EGHT and Zoom Video Communications ZM selected OCI services to enhance video meeting solutions in a secure manner amid explosive growth in user base.

Moreover, Oracle is witnessing rapid growth in adoption of Cloud HCM, which is increasingly being purchased as part of the company’s ERP cloud application suite. In May 2020, Goldman Sachs implemented and went live with Oracle Cloud HCM. Some of the other notable HCM wins also include Kroger, Norfolk County Council, Malaysia-based Petronas, MD Anderson Cancer Center, the United Nations and the University of Texas.

This ongoing momentum is anticipated to aid Oracle fortify its footprint in the public cloud services market, which per Gartner data, is projected to hit $364.06 billion in 2022 from $242.7 billion in 2019.

Persistent Risks

Oracle has to make investments to strengthen its cloud offerings with advanced capabilities to ensnare a larger market share and counter stiff competition in the cloud computing market from the likes of Amazon Web Services (AWS), Microsoft’s MSFT Azure and Google Cloud. This is likely to put pressure on margins, at least in the near term.

Per Synergy Research Group data, Oracle’s market share was trailing behind AWS, Azure, Google Cloud, Alibaba, IBM, Salesforce and Tencent in the second quarter of 2020.

Also, coronavirus crisis-induced sluggish spending across small and medium businesses owing to restricted economic activity and weak job market are likely to exert pressure on adoption of Oracle’s cloud offerings and HCM application solutions, at least in the near term.

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