The Pentagon has awarded Oracle a substantial contract valued at nearly $7 billion over ten years, which will involve the use of Oracle software across various military branches and the intelligence community.
This contract is seen as a major win for Oracle, especially as its stock has faced a 38% decline this year due to investor worries about the impact of artificial intelligence on traditional software companies. Following the announcement, Oracle's stock rose approximately 3% in after-hours trading.
The contract includes a five-year base period with both perpetual and subscription-based software licenses, as well as maintenance and consulting services. Kirsten Davies, the Department of Defense's chief information officer, highlighted that this procurement strategy is expected to save taxpayers at least $441 million.
Despite this positive development, Oracle is grappling with significant debt from investments in AI data centers and reported a 2% decline in quarterly software revenue, although its cloud revenue surged by 47%. The contract could help Oracle regain investor confidence and strengthen its market position, particularly as it continues to expand its AI capabilities