Oracle to Invest More Than $1 Billion in AI and Cloud Computing in Spain

Rhea-AI Summary

Oracle has announced a $1 billion investment to open a third cloud region in Madrid, Spain, aiming to enhance AI and cloud services. This expansion, in collaboration with Telefonica España, will support various industries, particularly the financial sector, by migrating critical workloads to Oracle Cloud Infrastructure (OCI). The new region will address regulatory requirements, such as the Digital Operational Resilience Act (DORA), and offer high-performance, secure cloud solutions. Oracle's investment is part of a broader strategy to bolster Spain's digital economy and innovation capabilities.

Positive

• Oracle's $1 billion investment in Spain indicates strong business growth and commitment to the region.
• The new cloud region in Madrid will enhance Oracle's service offerings and support critical industries.
• Collaboration with Telefonica España strengthens Oracle's market presence and operational capabilities.
• The investment aligns with Spain's strategic goals for digital transformation and economic growth.
• Increased cloud capacity will support compliance with EU regulations, benefiting financial and other sectors.

Negative

• None.

Insights

Financial Analyst

Oracle's $1 billion investment in Spain for expanding its cloud infrastructure represents a significant strategic move aimed at capturing market share in the European cloud services market. This investment will not only cater to the rising demand for cloud solutions but also allow Oracle to strengthen its position in the financial services sector, which is subject to stringent regulations like DORA and European Outsourcing Guidelines.

The expansion is likely to enhance Oracle's revenue streams in the long-term by increasing its customer base and leveraging Spain's growing demand for cloud services. However, this substantial capital expenditure raises questions about the short-term impact on Oracle's profitability and how it will manage this investment alongside its existing financial obligations.

For retail investors, it's important to watch how effectively Oracle implements this expansion and whether it meets the projected demand and regulatory needs of Spanish enterprises. The impact on Oracle's stock will heavily depend on its execution capabilities and subsequent revenue generation from this investment.

Tech Expert

Oracle's push to open a third cloud region in Madrid is a strategic move designed to meet the increasing demand for AI and cloud services in Spain. This development will offer advanced capabilities such as the Oracle Autonomous Database and MySQL HeatWave Database Service, which are important for businesses aiming to innovate and remain competitive. This expansion also means more resilient and scalable infrastructure for disaster recovery and data residency, which are critical for industries bound by stringent regulations.

The partnership with Telefónica España as the host further strengthens Oracle's cloud services by leveraging local expertise, which can be a game-changer in terms of service reliability and customer trust. The deployment of sovereign AI capabilities will also enable businesses to maintain data sovereignty and compliance with EU regulations. This is particularly important for industries like financial services, where compliance and data control are non-negotiable.

However, the challenge lies in whether Oracle can seamlessly integrate these advanced technologies into existing infrastructures and deliver on the promise of low-latency and high-performance services. Retail investors should keep an eye on the adoption rates and customer feedback post-implementation.

Market Research Analyst

The decision to invest more than $1 billion in a new cloud region in Spain aligns with the broader trend of global enterprises investing in digital transformation and cloud infrastructure. Oracle's move is a clear indication of its strategy to capture a larger share of the growing European cloud market. According to recent industry reports, Europe is expected to see substantial growth in cloud adoption, driven by the need for digital transformation and regulatory compliance.

Oracle’s collaboration with Telefónica España and the focus on industries like financial services, which require high security and compliance, could provide a competitive edge. This is especially relevant given the European Union’s stringent regulations on data privacy and operational resilience. Oracle’s ability to offer a full suite of cloud services, including AI, enhances its appeal to a wide range of sectors.

Nonetheless, this aggressive expansion comes with risks. The cloud market is highly competitive, with major players like AWS, Google Cloud and Microsoft Azure also vying for dominance. Oracle’s success will depend on its ability to differentiate its offerings and convince potential customers of its superior value proposition. Investors should monitor market share movements and customer acquisition rates closely.

Oracle plans to open a third cloud region to help Spain's financial sector and other key industries increase resilience and take advantage of Oracle Cloud Infrastructure's high performance and built-in security, powerful data and AI, and distributed cloud capabilities

Telefonica España to be the host partner for the region

MADRID and AUSTIN, Texas, June 20, 2024 /PRNewswire/ -- To meet the rapidly growing demand for its AI and cloud services in Spain, Oracle today announced plans to invest more than US $1 billion to open a third cloud region in Madrid and drive AI skills development across the country. The new public cloud region will enable Oracle customers and partners across all industries in Spain, including its prominent financial services sector, to migrate mission-critical workloads from their data centers to Oracle Cloud Infrastructure (OCI) while helping them address regulations like the Digital Operational Resilience Act (DORA) and the European Outsourcing Guidelines (EBA, EIOPA, ESMA). Telefonica España will be the host partner for the planned cloud region.

The upcoming cloud region in Madrid will help public and private sector organizations migrate all types of workloads to the cloud, modernize their applications, and innovate with data, analytics, and AI. Oracle is the only hyperscaler capable of delivering AI and a full suite of 100+ cloud services across dedicated, public, and hybrid cloud environments, anywhere in the world. This includes Oracle Autonomous Database, MySQL HeatWave Database Service, Oracle Container Engine for Kubernetes, Oracle Cloud VMware Solution, OCI Generative AI service, and OCI AI Infrastructure.

"The opening of the third Oracle cloud region in Spain is excellent news for our country," said José Luis Escrivá, minister for digital transformation and public administration, Government of Spain. "The investment announced by Oracle provides a significant boost that will help Spanish enterprises and public sector organizations innovate with AI and continue advancing on the path of digital transformation."

"It is great news that major technology multinationals such as Oracle are announcing this level of investment in the Region of Madrid," said Miguel López-Valverde, councillor for digitalisation, Government of the Region of Madrid. "We are convinced of the importance of public-private collaboration in this area, and of facilitating the development of cloud infrastructure in our region. Over the next three years, the region of Madrid is expected to receive investments of more than six billion Euros from the cloud industry, which is critical to helping us build a digital economy capable of creating high-quality jobs, attracting investment, and retaining talent."

Oracle also offers a separate EU Sovereign Cloud with one region in Madrid to help public and private sector customers with data and applications that are sensitive, regulated, or of strategic regional importance, move to the cloud. The Oracle EU Sovereign Cloud in Madrid is operated by EU-based personnel and supports workloads that fall under EU guidelines and requirements for sovereignty and data privacy.

"Spanish enterprises and public sector organizations are rapidly embracing the cloud to gain access to the latest digital technologies such as AI, and the upcoming public cloud in Madrid will help them address data residency requirements as well as regulations in key sectors such as financial services," said Albert Triola, country leader, Oracle Spain. "With our plans to invest an additional $1B in Spain over the next 10 years, we are reaffirming our commitment to helping Spanish organizations of all sizes and industries – including those across Spain's small and medium-sized enterprises and the financial services industry – accelerate their adoption of cloud technologies to boost business performance and resilience."

OCI Provides Customers and Partners with a Resilient and Scalable Cloud Foundation

With the upcoming new region adding to the existing Oracle Cloud Region in Madrid, customers and partners can gain additional low-latency access to cloud services to help them derive better value from their data. Customers can also leverage high availability and disaster recovery capabilities to enhance business continuity and help address Spain's and the EU's regulations and requirements for data residency, in addition to industry-specific requirements and regulations such as the Digital Operational Resilience Act (DORA) in the financial services sector.  

Financial services organizations face unique regulatory requirements due to the fact that their workloads are inherently sensitive, and Oracle has developed capabilities and practices to help customers in the financial services sector address requirements for DORA and other key industry regulations. As part of continuing efforts to help financial services customers perform their due diligence, Oracle developed the Advisory: Oracle Cloud Services and the European Outsourcing Guidelines (EBA, EIOPA, ESMA) to enable customers to evaluate OCI in the context of their regulatory outsourcing guidance. In addition, Oracle Cloud Regions – including the existing region and upcoming region in Madrid, as well as the EU Sovereign Cloud Region in Madrid – offer backup and disaster recovery solutions to help address customers' need for data availability and resilience.

In addition, OCI's sovereign AI capabilities provide customers with increased control over where they locate their data and computing infrastructure and how they manage it. As a result, customers can achieve AI sovereignty by gaining the assurance that their use of AI is aligned with data sovereignty frameworks.

OCI's unique cloud architecture enables Oracle to deploy dedicated cloud regions with hyperscale cloud services inside customer data centers and deploy more public cloud regions faster by starting with an optimal footprint and scaling as needed. This approach helps meet the needs of all countries and markets without compromising cloud capabilities, while also providing the consistent performance, SLAs, and global pricing for which OCI has become known.

Leading Organizations in Spain Welcome the Upcoming Public Cloud Region

"Our partnership with Oracle has been paying off for decades. We have a stronger position in the market, combining the best capabilities of both companies," said Sergio Sánchez, operations, network and IT director, Telefónica España. "On the one hand, we continue to migrate part of our mission-critical infrastructure to Oracle's cloud to be more agile in delivering innovative products and services to our customers around the world. On the other hand, this is the third cloud region for which we have been trusted as a host partner, again positioning us as a leader in the data center industry."

"We rely on Oracle to migrate our critical workloads to Oracle Cloud Infrastructure while complying with local regulatory requirements. OCI provides us with a robust and secure cloud infrastructure," said Enríque Rodríguez, director of technology services, Banco Sabadell. "The arrival of the third Oracle Cloud Region in Spain will open significant opportunities for us in terms of utilizing new technologies such as AI across different areas of our business."

"Naturgy is migrating a large part of its critical data infrastructure to OCI, which we selected for its scalability, performance, and price competitiveness," said Rafael Blesa, general manager of information systems, Naturgy. "The upcoming arrival of Oracle's third cloud region in Spain is great news as it will allow us to migrate low-latency and critical infrastructure support systems to the cloud while improving their security and resilience."

"The world's digital transformation is now unstoppable, and organizations everywhere need to adapt to remain relevant and competitive," said Ravin Dhalani, CIO, MASORANGE. "Cloud technologies play a critical role in the telecommunications industry, enabling vendors to meet demand for high-speed services while enhancing operational efficiency and productivity. We are excited about Oracle's upcoming third cloud region in Spain, which will help us advance our innovation on OCI."

About Oracle Distributed Cloud
Oracle's distributed cloud delivers the benefits of cloud with greater control and flexibility. Oracle's distributed cloud lineup includes:

• Public cloud: Hyperscale public cloud regions serve any size of organization, including those requiring strict EU sovereignty controls. See the full list of regions here.
• Dedicated cloud: Customers can run all OCI cloud services in their own data centers with OCI Dedicated Region, while partners can resell OCI cloud services and customize the experience using Oracle Alloy. Oracle also operates separate U.S., UK, and Australian Government Clouds, and Isolated Cloud Regions for U.S. national security purposes. Each of these products provide a full cloud and AI stack that customers can deploy as a Sovereign Cloud.
• Hybrid cloud: OCI delivers key cloud services on-premises via Oracle Exadata Cloud@Customer and Compute Cloud@Customer and is already managing deployments in over 60 countries.
• Multicloud: Options including Oracle Database@Azure, MySQL HeatWave on AWS and Microsoft Azure, Oracle Interconnect for Microsoft Azure, and Oracle Interconnect for Google Cloud allow customers to combine key capabilities from across clouds.

About Oracle
Oracle offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. For more information about Oracle (NYSE: ORCL), please visit us at www.oracle.com.

Trademarks
Oracle, Java, MySQL and NetSuite are registered trademarks of Oracle Corporation. NetSuite was the first cloud company—ushering in the new era of cloud computing.

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SOURCE Oracle

FAQ

What is the focus of Oracle's $1 billion investment in Spain?

Oracle's $1 billion investment focuses on opening a new cloud region in Madrid to enhance AI and cloud services across various industries, particularly the financial sector.

How will Oracle's new cloud region in Madrid benefit businesses in Spain?

The new cloud region will enable businesses to migrate mission-critical workloads to Oracle Cloud Infrastructure, ensuring high performance, security, and compliance with regulations like DORA.

Who is Oracle partnering with for the new cloud region in Madrid?

Oracle is partnering with Telefonica España to host the new cloud region in Madrid.

What are some key features of Oracle Cloud Infrastructure (OCI) mentioned in the press release?

OCI offers high performance, built-in security, data analytics, AI capabilities, and compliance with EU regulations like the Digital Operational Resilience Act (DORA).

What regulatory requirements will Oracle's new cloud region address?

The new cloud region will help address requirements such as the Digital Operational Resilience Act (DORA) and European Outsourcing Guidelines.