AI Daily: Oracle jumps following earnings on AI cloud gains

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

AI CLOUD GAINS: Oracle (ORCL) reported slightly lower-than-expected Q1 earnings and revenue, though the shares surged after the company’s CEO said AI-fueled cloud revenue was set to jump to $144B. “We expect Oracle Cloud Infrastructure revenue to grow 77% to $18B this fiscal year — and then increase to $32B, $73B, $114B, and $144B over the subsequent four years,” CEO Safra Catz said.

Subsequent to last night’s report, The Wall Street Journal’s Berber Jin reported, citing people familiar with the matter, that Microsoft-backed (MSFT) OpenAI has inked a deal to buy $300B in computing power over roughly five years from Oracle. The deal is one of the biggest cloud contracts ever signed, the author notes.

NEAR DEAL: Reflection AI, a year-old start-up backed by Nvidia (NVDA) and Sequoia Capital, is on the verge of a funding round that will value the company at up to $5.5B, 10 times the valuation it achieved six months ago, Financial Times’ George Hammond and George Steer report. Reflection, which is building artificial intelligence tools focused on coding, would raise about $1B, according to four people with direct knowledge of the financing. Nvidia’s venture capital arm would invest at least $250M, two of the people said. It will be joined by Lightspeed Venture Partners, Sequoia and Yuri Milner’s DST Global.

NEW FUNDING: Replit, the agentic AI software creation platform, announced a $250M round, valuing the company at $3B, an almost 3x valuation increase since its last raise in 2023. The funding comes on the heels of Replit growing annualized revenue from $2.8M to $150M in less than a year, a more than 50x increase, driven by a global community of more than 40M users, the company said. Prysm Capital leads the round which includes Amex Ventures and Google’s (GOOGL) AI Futures Fund as strategic investors. YC, Craft, a16z, Coatue, Paul Graham, and others are deepening their investments. The company also noted that creators across various industries use Replit to build apps, including teams at Zillow (ZG), Duolingo (DUOL), and Coinbase (COIN), among others. In addition to the new investment, Replit announced that its products are now available to global customers through the Google Cloud Marketplace. The new funds will be used for scaling operations, accelerated product development, and global expansion as Replit builds out a new way to work in the era of AI.

IMAGE CONTRACT: Meta Platforms (META) has signed a multi-year contract worth more than $100M to use technology from AI image startup Black Forest Labs, the latest investment by the social media firm to expand its artificial intelligence offerings, Bloomberg’s Kate Clark reports. As part of the deal, Meta will commit $35M to the German startup in the first year and $105M in the second year, according to a person familiar with the matter.

OFFICE AI FEATURES: Microsoft will pay to use Anthropic’s technology for some AI features in Office 365 apps in what The Information calls the company’s “biggest step to lessen reliance on OpenAI’s artificial intelligence.” According to two people involved in the effort, the move will blend Anthropic and OpenAI technology for features in Word, Excel, Outlook and PowerPoint, reported The Information’s Aaron Holmes.

SOURCE OF GROWTH: Nebius Group (NBIS) announced the launch of an offering of convertible notes and a concurrent offering of Class A shares to support the accelerated future growth of its core business. The company said, “Our core AI cloud business is growing rapidly, and we continue to be laser focused on developing this business. We view long-term contracts such as the one we announced this week with Microsoft as important incremental sources of growth. We intend to use the net proceeds from the offerings we have announced today, if consummated, to finance the continuing growth of our business, including the acquisition of additional compute power and hardware, securing strategic high-quality and well-located land plots with reliable providers, the expansion of our data center footprint, and for general corporate purposes. We believe this will enable us to aggressively grow our core business in 2026 and beyond as we aim to scale our global data center portfolio, including through new greenfield sites, and the expansion of our customer base, from AI native tech startups to larger enterprises. As we continue to access the capital that we need to capture the substantial growth opportunity ahead, we will remain focused on mitigating shareholder dilution and maintaining appropriate levels of debt on favorable terms. Our strong balance sheet and our recently announced agreement with Microsoft give us an opportunity to further optimize our capital structure and cost of funding. For example, we expect to finance the associated capital expenditures through a combination of cash flows under the arrangement and the issuance of debt secured against the contract and related infrastructure, at terms that reflect the credit quality of the counterparty.”