Which Hidden Stocks Will Thrive in Oracle's Success?
Published: 2025-09-16 18:09:36 | Category: Trump GNEWS Search
Oracle's recent earnings report revealed a staggering 359% increase in its remaining performance obligations, reaching an impressive $455 billion. This has led to soaring investor confidence, with shares climbing by 36%. The company is poised to generate an estimated $144 billion in cloud infrastructure revenue by fiscal year 2030, a significant leap from the expected £18 billion in fiscal year 2025. To support this ambitious growth, Oracle plans to construct an additional 37 data centers, which presents a lucrative opportunity for several under-the-radar stocks. Below, we explore three companies that stand to benefit significantly from Oracle's expansion plans.
Last updated: 09 October 2023 (BST)
Key Takeaways
- Oracle's performance obligations surged by 359%, signalling strong future growth.
- The company aims for £144 billion in cloud revenue by 2030, up from £18 billion in 2025.
- Oracle's expansion involves building 37 new data centers.
- Three lesser-known stocks—Credo, Applied Optoelectronics, and Coherent—are set to gain from this expansion.
- Investors have already reacted positively, with shares of these companies rising significantly.
Oracle's Financial Surge: What It Means for the Tech Sector
Oracle's latest earnings report has undeniably shaken the tech world. The company's remaining performance obligations—a key indicator of future revenue—rose to £455 billion, a remarkable increase that reflects a growing demand for its cloud services. This performance not only showcases Oracle's robust market position but also highlights the expanding need for cloud infrastructure in the tech industry.
As Oracle sets its sights on generating £144 billion in cloud infrastructure revenue by 2030, the implications for the wider tech ecosystem are significant. This growth trajectory suggests that the demand for data centres and related technologies will increase substantially. Consequently, companies that provide essential components for data centres are likely to experience a surge in orders and revenue.
Why New Data Centres Matter
The construction of new data centres is a critical aspect of meeting the ever-growing demands of the digital economy. These facilities house servers that store and manage vast amounts of data, facilitating everything from cloud computing to artificial intelligence applications. As companies increasingly rely on cloud services, the need for more data centres becomes paramount.
The Impact on Related Sectors
Building additional data centres requires a plethora of components, from electrical cables to optical transceivers. Each new facility represents a series of purchases for equipment that ensures smooth operations. With Oracle's announcement, several smaller companies within the supply chain stand to benefit, including:
1. Credo Technology Group (CRDO): Building the Highways of Data Centres
Credo Technology Group is a key player in the data centre supply chain, specialising in active electrical cables (AEC). These cables are crucial for interconnecting data centre components, enabling seamless communication between devices. With Oracle's ambitious plans for data centres, Credo is well-positioned to receive increased orders for its products.
Recently, Credo has experienced remarkable demand for its AEC products, boasting a revenue growth rate of 274% last quarter. This consistent growth trajectory suggests that the company is tapping into a substantial market, with a total addressable market for AECs estimated between £5 billion and £10 billion. As of now, Credo has generated approximately £600 million in revenue over the past year, indicating substantial room for growth as the need for data centres expands.
2. Applied Optoelectronics (AAOI): Translating Signals in Data Centres
Applied Optoelectronics, valued at around £1.7 billion, primarily focuses on manufacturing optical transceivers, which convert electrical signals into optical signals. This technology is essential for the efficient transmission of data within and between data centres. Given the anticipated increase in data centre construction, AAOI stands to gain from heightened demand for its products.
Although it is uncertain whether Oracle will become a client, the overall growth in data centre infrastructure is a positive sign for AAOI. The company has already secured a major hyperscaler customer, demonstrating that its technology has gained traction in the market. Following Oracle's announcement, AAOI shares rose by 17%, reflecting investor optimism regarding the company's future prospects.
3. Coherent (COHR): Large-Cap Transceiver Name Building Connections Across Data Centres
Coherent has established itself as a leader in the optical transceiver market, generating nearly £950 million in revenue within its data centre and communications segments. With a market capitalisation of £16 billion, Coherent represents a less risky investment compared to smaller firms like AAOI, albeit with a more muted share price increase of 4.3% on the same day Oracle announced its plans.
The company's extensive customer base includes multiple hyperscalers, enabling it to diversify its offerings and reduce risk. Coherent's data centre interconnect (DCI) transceivers facilitate communication between geographically dispersed data centres, a capability that is likely to be in high demand as Oracle expands its operations. This positions Coherent as a critical player in the evolving data centre landscape.
CRDO, AAOI, COHR: Buildout Beneficiaries
In summary, the recent developments at Oracle signal a transformative period for the tech industry, particularly in the data centre sector. As the company embarks on its ambitious expansion plans, companies like Credo, Applied Optoelectronics, and Coherent stand to benefit significantly.
Investors should keep a close eye on these firms, as they may represent lucrative opportunities in a rapidly evolving market. With Oracle leading the charge for more data centres, the potential for growth within these under-the-radar stocks is substantial. As the demand for data processing and storage continues to rise, companies supplying the necessary technology will find themselves at the forefront of this digital revolution.
What’s Next for Oracle and Its Partners?
As Oracle moves forward with its expansion plans, the company will likely continue to explore innovative solutions to meet the increasing demands of its clients. This may involve partnerships with firms like Credo, Applied Optoelectronics, and Coherent, fostering a collaborative environment that drives technological advancements in the data centre sector.
The broader implications of Oracle's growth trajectory extend beyond its immediate business. As more companies pivot towards cloud services, the entire tech ecosystem will adapt, leading to new opportunities for innovation and investment. Stakeholders must remain vigilant, monitoring the developments within this sector to capitalise on emerging trends.
FAQs
What are Oracle's plans for data centres?
Oracle plans to construct 37 new data centres to support its ambitious goal of generating £144 billion in cloud infrastructure revenue by 2030, significantly increasing its capacity to meet customer demands.
Which companies could benefit from Oracle's expansion?
Companies like Credo Technology Group, Applied Optoelectronics, and Coherent are well-positioned to benefit from Oracle's data centre build-out due to their roles in providing essential components for these facilities.
How has Oracle's stock reacted to recent news?
Oracle's stock surged by 36% following the announcement of its earnings report, reflecting strong investor confidence in the company's future growth prospects associated with its data centre expansion plans.
What is the significance of remaining performance obligations?
Remaining performance obligations indicate the total amount of revenue a company expects to earn from contracts that are not yet fulfilled. Oracle's 359% increase in this metric signals robust future growth potential.
How does the demand for data centres affect technology companies?
The increasing demand for data centres drives growth opportunities for technology companies that supply components and services necessary for their construction and operation, creating a ripple effect across the industry.
