Oracle (NYSE:ORCL) has revealed its intention to inject over $8 billion into Japan over the next decade to cater to the escalating demand for cloud computing and artificial intelligence (AI) infrastructure. This substantial investment is geared towards expanding the presence of Oracle Cloud Infrastructure (OCI) across Japan. Moreover, the company aims to bolster its operations and support engineering teams in Japan to provide assistance to customers and partners with digital sovereignty requirements.

To meet the needs of customers and partners in Japan, ORCL will enhance local customer support for its public cloud regions in Tokyo and Osaka. It also intends to expand its local operations teams for services such as Oracle Alloy and OCI Dedicated Region. These initiatives aim to facilitate the migration of critical workloads to OCI, enabling the Japanese government and businesses to securely adopt sovereign AI solutions.

The company’s sovereign cloud and AI services will be accessible within Japan’s borders or on-premises for organizations, offering various operational controls for security. Oracle distinguishes itself as the sole hyperscaler capable of delivering AI and a comprehensive suite of over 100 cloud services locally and globally.

Shares of Oracle have surged by 12.6% year to date, surpassing the Computer and Technology sector’s growth of 6.1%. This exceptional performance is attributed to ORCL’s alignment with customer needs.

ORCL Faces Competition in Japan’s Cloud Computing Market

According to a report by Techanivo, the cloud computing market in Japan is forecasted to reach $30.24 billion by 2027, with a CAGR of 12.54% between 2022 and 2027.

The Japanese cloud computing market is expanding rapidly as small and medium-sized businesses increasingly adopt cloud services to reduce costs and leverage new technologies. Cloud computing enables companies to scale their computing resources dynamically to meet changing demands without investing in additional hardware or software.

Oracle faces stiff competition in Japan’s cloud computing market from major players such as Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Alphabet (NASDAQ:GOOGL).

Microsoft Cloud offers a wide array of technology tools and solutions to help businesses adapt to evolving landscapes. The company recently announced a $2.9 billion investment over the next few years to enhance its large-scale cloud computing and AI infrastructure in Japan. Additionally, MSFT plans to expand its digital training initiatives, aiming to provide AI skills training to over three million individuals in the next three years.

Amazon Web Services (AWS), the cloud division of AMZN, provides cloud services to government entities, with more than 7,500 agencies utilizing its platform. AWS announced plans to invest 2.26 trillion yen ($15.24 billion) in Japan by 2027 to expand its cloud computing infrastructure supporting AI services.

Google Cloud, owned by Alphabet, offers a range of flexible cloud services, including computing, storage, data analysis, and machine learning. GOOGL established its first data center in Japan near Tokyo in 2023 and operates cloud regions in Tokyo and Osaka.

ORCL recently partnered with Fujitsu Limited to deliver cloud and AI services tailored to meet the digital sovereignty requirements of the Japanese government and businesses. Through Oracle Alloy, Fujitsu will enhance its Hybrid IT services for Fujitsu Uvance, aiding customers in business growth and addressing societal challenges. This collaboration is expected to boost ORCL’s Asia-Pacific revenues in the coming quarters.

The Consensus Estimate for ORCL’s fiscal 2024 Asia-Pacific revenues stands at $6.87 billion, indicating year-over-year growth of 3.8%. The consensus estimate for earnings is $5.58 per share, reflecting year-over-year growth of 8.98%.

Featured Image: Unsplash

Please See Disclaimer