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Larry Ellison, Oracle’s chairman and technology chief, speaks at the Oracle OpenWorld conference in San Francisco on September 16, 2019.

Justin Sullivan | Getty Images

Oracle is having a moment.

For years, the database software developer lagged behind tech rivals in building cloud technology that met the demands of the modern-day enterprise. But that’s changing, and Wall Street is quite pleased with what it sees from Larry Ellison’s 46-year-old company.

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Oracle shares climbed 4.8% on Wednesday to $122.24, closing at a record for a fifth straight day and the eighth time this month. The stock is up 73% over the past 12 months, outperforming all large-cap enterprise tech stocks over that stretch other than Nvidia. The shares are up over 50% in 2023, which would mark the best year for shareholders since the dot-com boom of 1999.

The company got its latest boost this week after reporting stronger-than-expected earnings and revenue, prompting nods of approval from analysts. Goldman Sachs upgraded its rating on the stock to the equivalent of hold from sell.

Within hours of the earnings report, Bloomberg declared that Ellison had reached the No. 4 spot on its ranking of billionaires, his highest spot to date. He surpassed Microsoft co-founder Bill Gates.

“Let’s give him credit where it’s finally due,” said Eric Lynch, managing director of Scharf Investments, which held $163 million worth of Oracle shares at the end of the first quarter, according to regulatory filings. “The upside case is finally coming through.”

The story that’s exciting investors these days? No surprise. It’s about artificial intelligence.

Prior to the latest rally, Oracle was largely viewed as a technology has-been rather than as an innovator. In the red-hot cloud market, it had lost market share to Salesforce in selling software to sales reps, and was a bit player in infrastructure as a service (IaaS), where Amazon, Microsoft and Google were leading the way. Oracle picked up significant business from TikTok and Zoom, but big names were mostly going elsewhere.

Now, Oracle is seeing accelerated growth thanks to the craze around generative AI, the technology that can craft images or text from a few words of human input. The company is a significant investor in Cohere, an enterprise-focused generative AI startup whose technology can power copywriting, search and summarization. 

Cohere is valued at over $2 billion and ranked No. 44 on CNBC’s 2023 Disruptor 50 List.

On the earnings call, Ellison told analysts that customers have “recently signed contracts to purchase more than $2 billion of capacity” on what Oracle calls its Gen 2 Cloud.

After its market cap fell below that of the younger Salesforce in 2020, Oracle reclaimed the lead over its longtime rival the following year, and now it’s not even close. Oracle is worth $330 billion as of Wednesday’s close, while Salesforce’s market cap sits at $204 billion.

Oracle is even growing faster, with revenue in the latest quarter increasing 17% from the prior year, compared to 11% growth at Salesforce.

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Cloud infrastructure revenue at Oracle surged 76% from a year earlier, surpassing growth of 55% the prior quarter. That’s one data point that analyst Kash Rangan and his Goldman Sachs colleagues highlighted in their upgrade.

The analysts said the acceleration is “a clear signal that Oracle’s advertised price/performance advantage vs. the hyperscalers is resonating with the market (both net new and existing customers), which should position the company for durable share gains despite its late entry into IaaS.”

Even with the cloud infrastructure growth, Oracle management called for no change to capital expenditures in the new 2024 fiscal year, which bodes well for free cash flow generation, the Goldman analysts said.

Like several enterprise-focused technology companies, Oracle started selling cloud-based versions of applications that clients had previously run in their on-premises data centers. The company expanded its reach with the $9.1 billion acquisition of NetSuite in 2016.

Rebuilding the guts of the data center was less straightforward, and Oracle quickly fell behind. In 2009, Ellison dismissed the rise of cloud-computing branding.

“Our industry is so bizarre,” he said. “You know, they just change a term, and they think they’ve invented technology.”

Ellison made a bad bet. Between 2010 and the end of 2020, not only did Oracle’s stock badly underperform Amazon, Microsoft and Google, but just buying an S&P 500 tracking index would have returned almost double what an investor would’ve have made on Oracle.

Oracle eventually came around to charging organizations for servers, storage and networking services based on how much they used, following in the path of the market leaders.

The company introduced the Elastic Compute Cloud in 2015, nine years after the launch of Amazon Web Services’ foundational EC2 computing service. Then, in 2018, Oracle debuted its Gen 2 cloud portfolio.

In October Ellison said he thought Oracle had been copying rivals, so he canceled the existing cloud effort and pushed for a new approach. As organizations look for ways to reduce IT spending, Ellison on Monday told analysts that Oracle’s cloud database can be faster and cheaper than what’s available from AWS.

Lynch, whose Los Gatos, California-based investment firm took a stake in Oracle in 2011, recalled that people used to poke fun of Ellison for his earnings call routine of reciting the names of small-time operations that had signed up for Oracle’s cloud services. The company was still appealing to value-oriented investors because it had a strong balance sheet due to a huge roster of legacy clients, and boasted stronger profit margins than many of its peers.

Now Ellison can reel off big brands using his company’s cloud. Oracle called out Dollar Tree, Exxon Mobil, and Pfizer as cloud customers during its fiscal fourth quarter.

Lynch acknowledged that Oracle appears to be enjoying its position within the AI gold rush and said he doesn’t expect such high growth in cloud infrastructure to persist.

For the time being, Ellison can enjoy his company’s bragging rights in Silicon Valley at a time when so many high-profile and once high-flying neighbors are downsizing for the first time in their history. Oracle has had some layoffs but a smaller number.

On Oracle’s earnings call this week, CEO Safra Catz took a minute to express gratitude to the company’s customers and employees.

“Some of you are new, and many of you have been with us for years, in fact, even decades, and I think you all see that our best days are in fact ahead of us,” she said. Catz then thanked Ellison “for leading with brilliance, determination and vision and allowing us to all be part of this incredible journey, which is just getting started.”

WATCH: Oracle ‘multiple years late’ in A.I. race despite post-earnings surge, says Jefferies’ Brent Thill

Oracle 'multiple years late' in A.I. race despite post-earnings surge, says Jefferies' Brent Thill

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How Elon Musk’s plan to slash government agencies and regulation may benefit his empire

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How Elon Musk’s plan to slash government agencies and regulation may benefit his empire

Elon Musk’s business empire is sprawling. It includes electric vehicle maker Tesla, social media company X, artificial intelligence startup xAI, computer interface company Neuralink, tunneling venture Boring Company and aerospace firm SpaceX. 

Some of his ventures already benefit tremendously from federal contracts. SpaceX has received more than $19 billion from contracts with the federal government, according to research from FedScout. Under a second Trump presidency, more lucrative contracts could come its way. SpaceX is on track to take in billions of dollars annually from prime contracts with the federal government for years to come, according to FedScout CEO Geoff Orazem.

Musk, who has frequently blamed the government for stifling innovation, could also push for less regulation of his businesses. Earlier this month, Musk and former Republican presidential candidate Vivek Ramaswamy were tapped by Trump to lead a government efficiency group called the Department of Government Efficiency, or DOGE.

In a recent commentary piece in the Wall Street Journal, Musk and Ramaswamy wrote that DOGE will “pursue three major kinds of reform: regulatory rescissions, administrative reductions and cost savings.” They went on to say that many existing federal regulations were never passed by Congress and should therefore be nullified, which President-elect Trump could accomplish through executive action. Musk and Ramaswamy also championed the large-scale auditing of agencies, calling out the Pentagon for failing its seventh consecutive audit. 

“The number one way Elon Musk and his companies would benefit from a Trump administration is through deregulation and defanging, you know, giving fewer resources to federal agencies tasked with oversight of him and his businesses,” says CNBC technology reporter Lora Kolodny.

To learn how else Elon Musk and his companies may benefit from having the ear of the president-elect watch the video.

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Why X’s new terms of service are driving some users to leave Elon Musk’s platform

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Why X's new terms of service are driving some users to leave Elon Musk's platform

Elon Musk attends the America First Policy Institute gala at Mar-A-Lago in Palm Beach, Florida, Nov. 14, 2024.

Carlos Barria | Reuters

X’s new terms of service, which took effect Nov. 15, are driving some users off Elon Musk’s microblogging platform. 

The new terms include expansive permissions requiring users to allow the company to use their data to train X’s artificial intelligence models while also making users liable for as much as $15,000 in damages if they use the platform too much. 

The terms are prompting some longtime users of the service, both celebrities and everyday people, to post that they are taking their content to other platforms. 

“With the recent and upcoming changes to the terms of service — and the return of volatile figures — I find myself at a crossroads, facing a direction I can no longer fully support,” actress Gabrielle Union posted on X the same day the new terms took effect, while announcing she would be leaving the platform.

“I’m going to start winding down my Twitter account,” a user with the handle @mplsFietser said in a post. “The changes to the terms of service are the final nail in the coffin for me.”

It’s unclear just how many users have left X due specifically to the company’s new terms of service, but since the start of November, many social media users have flocked to Bluesky, a microblogging startup whose origins stem from Twitter, the former name for X. Some users with new Bluesky accounts have posted that they moved to the service due to Musk and his support for President-elect Donald Trump.

Bluesky’s U.S. mobile app downloads have skyrocketed 651% since the start of November, according to estimates from Sensor Tower. In the same period, X and Meta’s Threads are up 20% and 42%, respectively. 

X and Threads have much larger monthly user bases. Although Musk said in May that X has 600 million monthly users, market intelligence firm Sensor Tower estimates X had 318 million monthly users as of October. That same month, Meta said Threads had nearly 275 million monthly users. Bluesky told CNBC on Thursday it had reached 21 million total users this week.

Here are some of the noteworthy changes in X’s new service terms and how they compare with those of rivals Bluesky and Threads.

Artificial intelligence training

X has come under heightened scrutiny because of its new terms, which say that any content on the service can be used royalty-free to train the company’s artificial intelligence large language models, including its Grok chatbot.

“You agree that this license includes the right for us to (i) provide, promote, and improve the Services, including, for example, for use with and training of our machine learning and artificial intelligence models, whether generative or another type,” X’s terms say.

Additionally, any “user interactions, inputs and results” shared with Grok can be used for what it calls “training and fine-tuning purposes,” according to the Grok section of the X app and website. This specific function, though, can be turned off manually. 

X’s terms do not specify whether users’ private messages can be used to train its AI models, and the company did not respond to a request for comment.

“You should only provide Content that you are comfortable sharing with others,” read a portion of X’s terms of service agreement.

Though X’s new terms may be expansive, Meta’s policies aren’t that different. 

The maker of Threads uses “information shared on Meta’s Products and services” to get its training data, according to the company’s Privacy Center. This includes “posts or photos and their captions.” There is also no direct way for users outside of the European Union to opt out of Meta’s AI training. Meta keeps training data “for as long as we need it on a case-by-case basis to ensure an AI model is operating appropriately, safely and efficiently,” according to its Privacy Center. 

Under Meta’s policy, private messages with friends or family aren’t used to train AI unless one of the users in a chat chooses to share it with the models, which can include Meta AI and AI Studio.

Bluesky, which has seen a user growth surge since Election Day, doesn’t do any generative AI training. 

“We do not use any of your content to train generative AI, and have no intention of doing so,” Bluesky said in a post on its platform Friday, confirming the same to CNBC as well.

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The Pentagon’s battle inside the U.S. for control of a new Cyber Force

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The Pentagon's battle inside the U.S. for control of a new Cyber Force

A recent Chinese cyber-espionage attack inside the nation’s major telecom networks that may have reached as high as the communications of President-elect Donald Trump and Vice President-elect J.D. Vance was designated this week by one U.S. senator as “far and away the most serious telecom hack in our history.”

The U.S. has yet to figure out the full scope of what China accomplished, and whether or not its spies are still inside U.S. communication networks.

“The barn door is still wide open, or mostly open,” Senator Mark Warner of Virginia and chairman of the Senate Intelligence Committee told the New York Times on Thursday.

The revelations highlight the rising cyberthreats tied to geopolitics and nation-state actor rivals of the U.S., but inside the federal government, there’s disagreement on how to fight back, with some advocates calling for the creation of an independent federal U.S. Cyber Force. In September, the Department of Defense formally appealed to Congress, urging lawmakers to reject that approach.

Among one of the most prominent voices advocating for the new branch is the Foundation for Defense of Democracies, a national security think tank, but the issue extends far beyond any single group. In June, defense committees in both the House and Senate approved measures calling for independent evaluations of the feasibility to create a separate cyber branch, as part of the annual defense policy deliberations.

Drawing on insights from more than 75 active-duty and retired military officers experienced in cyber operations, the FDD’s 40-page report highlights what it says are chronic structural issues within the U.S. Cyber Command (CYBERCOM), including fragmented recruitment and training practices across the Army, Navy, Air Force, and Marines.

“America’s cyber force generation system is clearly broken,” the FDD wrote, citing comments made in 2023 by then-leader of U.S. Cyber Command, Army General Paul Nakasone, who took over the role in 2018 and described current U.S. military cyber organization as unsustainable: “All options are on the table, except the status quo,” Nakasone had said.

Concern with Congress and a changing White House

The FDD analysis points to “deep concerns” that have existed within Congress for a decade — among members of both parties — about the military being able to staff up to successfully defend cyberspace. Talent shortages, inconsistent training, and misaligned missions, are undermining CYBERCOM’s capacity to respond effectively to complex cyber threats, it says. Creating a dedicated branch, proponents argue, would better position the U.S. in cyberspace. The Pentagon, however, warns that such a move could disrupt coordination, increase fragmentation, and ultimately weaken U.S. cyber readiness.

As the Pentagon doubles down on its resistance to establishment of a separate U.S. Cyber Force, the incoming Trump administration could play a significant role in shaping whether America leans toward a centralized cyber strategy or reinforces the current integrated framework that emphasizes cross-branch coordination.

Known for his assertive national security measures, Trump’s 2018 National Cyber Strategy emphasized embedding cyber capabilities across all elements of national power and focusing on cross-departmental coordination and public-private partnerships rather than creating a standalone cyber entity. At that time, the Trump’s administration emphasized centralizing civilian cybersecurity efforts under the Department of Homeland Security while tasking the Department of Defense with addressing more complex, defense-specific cyber threats. Trump’s pick for Secretary of Homeland Security, South Dakota Governor Kristi Noem, has talked up her, and her state’s, focus on cybersecurity.

Former Trump officials believe that a second Trump administration will take an aggressive stance on national security, fill gaps at the Energy Department, and reduce regulatory burdens on the private sector. They anticipate a stronger focus on offensive cyber operations, tailored threat vulnerability protection, and greater coordination between state and local governments. Changes will be coming at the top of the Cybersecurity and Infrastructure Security Agency, which was created during Trump’s first term and where current director Jen Easterly has announced she will leave once Trump is inaugurated.

Cyber Command 2.0 and the U.S. military

John Cohen, executive director of the Program for Countering Hybrid Threats at the Center for Internet Security, is among those who share the Pentagon’s concerns. “We can no longer afford to operate in stovepipes,” Cohen said, warning that a separate cyber branch could worsen existing silos and further isolate cyber operations from other critical military efforts.

Cohen emphasized that adversaries like China and Russia employ cyber tactics as part of broader, integrated strategies that include economic, physical, and psychological components. To counter such threats, he argued, the U.S. needs a cohesive approach across its military branches. “Confronting that requires our military to adapt to the changing battlespace in a consistent way,” he said.

In 2018, CYBERCOM certified its Cyber Mission Force teams as fully staffed, but concerns have been expressed by the FDD and others that personnel were shifted between teams to meet staffing goals — a move they say masked deeper structural problems. Nakasone has called for a CYBERCOM 2.0, saying in comments early this year “How do we think about training differently? How do we think about personnel differently?” and adding that a major issue has been the approach to military staffing within the command.

Austin Berglas, a former head of the FBI’s cyber program in New York who worked on consolidation efforts inside the Bureau, believes a separate cyber force could enhance U.S. capabilities by centralizing resources and priorities. “When I first took over the [FBI] cyber program … the assets were scattered,” said Berglas, who is now the global head of professional services at supply chain cyber defense company BlueVoyant. Centralization brought focus and efficiency to the FBI’s cyber efforts, he said, and it’s a model he believes would benefit the military’s cyber efforts as well. “Cyber is a different beast,” Berglas said, emphasizing the need for specialized training, advancement, and resource allocation that isn’t diluted by competing military priorities.

Berglas also pointed to the ongoing “cyber arms race” with adversaries like China, Russia, Iran, and North Korea. He warned that without a dedicated force, the U.S. risks falling behind as these nations expand their offensive cyber capabilities and exploit vulnerabilities across critical infrastructure.

Nakasone said in his comments earlier this year that a lot has changed since 2013 when U.S. Cyber Command began building out its Cyber Mission Force to combat issues like counterterrorism and financial cybercrime coming from Iran. “Completely different world in which we live in today,” he said, citing the threats from China and Russia.

Brandon Wales, a former executive director of the CISA, said there is the need to bolster U.S. cyber capabilities, but he cautions against major structural changes during a period of heightened global threats.

“A reorganization of this scale is obviously going to be disruptive and will take time,” said Wales, who is now vice president of cybersecurity strategy at SentinelOne.

He cited China’s preparations for a potential conflict over Taiwan as a reason the U.S. military needs to maintain readiness. Rather than creating a new branch, Wales supports initiatives like Cyber Command 2.0 and its aim to enhance coordination and capabilities within the existing structure. “Large reorganizations should always be the last resort because of how disruptive they are,” he said.

Wales says it’s important to ensure any structural changes do not undermine integration across military branches and recognize that coordination across existing branches is critical to addressing the complex, multidomain threats posed by U.S. adversaries. “You should not always assume that centralization solves all of your problems,” he said. “We need to enhance our capabilities, both defensively and offensively. This isn’t about one solution; it’s about ensuring we can quickly see, stop, disrupt, and prevent threats from hitting our critical infrastructure and systems,” he added.

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