Investors’ fears that AI could dampen spending on traditional business applications have wreaked havoc on the shares of companies like Salesforce, ServiceNow and Workday. But Oracle executives this week cited how businesses can use Oracle’s AI tools as evidence that Oracle is immune to the so-called Saaspocalpyse. On an earnings call earlier this week, executive chair and CTO Larry Ellison said hospitals can add AI agents to their Oracle applications to automate many of the tasks that human staff perform, from training nurses and matching radiologists with patients to dealing with federal regulators and pharmaceutical companies.
Investors’ fears that AI could dampen spending on traditional business applications have wreaked havoc on the shares of companies like Salesforce, ServiceNow and Workday. But Oracle executives this week cited how businesses can use Oracle’s AI tools as evidence that Oracle is immune to the so-called Saaspocalpyse.
On an earnings call earlier this week, executive chair and CTO Larry Ellison said hospitals can add AI agents to their Oracle applications to automate many of the tasks that human staff perform, from training nurses and matching radiologists with patients to dealing with federal regulators and pharmaceutical companies.
“That is why we think we are a disruptor. That is why we think the SaaS apocalypse applies to others, but not to us,” Ellison said on the call.
Oracle co-CEO Mike Sicilia, on the same call, said the fact that AI startups are training models on its cloud service—which includes AI models from OpenAI and xAI—is another advantage. He said Oracle isn’t charging customers extra to use AI features in its software. That may be because Oracle has been able to get the AI to run at a low cost in its own cloud, thanks to its experience working with the AI labs.
The Oracle executives’ comments probably won’t put to rest the questions many investors have about how AI will affect the future of software applications used by businesses. And if AI is indeed making Oracle more valuable to customers, it isn’t yet showing up in Oracle’s numbers.
Revenue growth in several of Oracle’s cloud application categories declined last quarter by at least several percentage points compared to the previous quarter, the company disclosed for the first time. Those categories include enterprise resource planning, customer management and supply chain management.
One category, an app for human resources, accelerated its growth rate.
Overall, Oracle’s cloud application revenue growth of 13% last quarter was up 2 percentage points from its growth in the previous quarter, but it was flat after accounting for currency value changes.
Oracle executives didn’t offer a reason for the flat growth rate on a constant currency basis. And there is reason to think the business may pick up. Sicilia pointed to the 14% growth in “deferred revenue” for cloud applications—the cash Oracle has received from customers for applications they haven't begun using—as a sign that the business will accelerate in coming quarters.
Still, plenty of questions about the impact of AI on software remain. Sicilia dodged a question about how Oracle plans to deal with customers that want to use AI agents made by other firms to access the data they store in Oracle’s database software. Responding to the rise of such AI, including superagents that effectively use enterprise apps the way humans do, is going to force a major response from enterprise application incumbents soon or later.
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