After more than a decade of competition, Amazon Web Services (AMZN) is changing course on Oracle (ORCL).
On Wednesday, AWS announced a partnership with Oracle that will allow customers to access Oracle Autonomous Database and Oracle Exadata Database Service within AWS, making it easier for customers to integrate data and manage databases.
The partnership is a marriage of former foes. Oracle Database@AWS marks a pivot in the longstanding competitive relationship between the two companies.
"Hell hath frozen over," Patrick Moorhead, CEO and chief analyst at Moor Insights & Strategy, told Yahoo Finance about the partnership. "These two companies have been essentially at war with each other since AWS was formed 15 years ago, and AWS's thesis before this was they were going to take out Oracle ... and they would use their database. ... What's clear today ... was that Oracle database is very much alive and well."
Oracle stock jumped 12% in early trading Thursday on the news, while Amazon stock rose 2%.
AWS CEO Matt Garman spoke to Yahoo Finance about the partnership at the Goldman Sachs 2024 Communicopia and Technology Conference on Wednesday. According to Garman, who is three months into his CEO role at AWS, "We've always wanted to have a broad set of offerings for customers, ... [and] customers do like running on Oracle databases."
"We thought about how integrating AI services into Oracle databases would work," Garman said (video above). "It took us a while to get there, but I do think it's a partnership that strongly benefits customers, and that's something that's good for AWS. It's good for Oracle."
The partnership is certainly a shift. As of Thursday, AWS and Oracle still had blog posts on their websites highlighting challenges and complaints about each other's services. For instance, AWS pointed out complaints about Oracle's "non-standardized systems" and "jaw-dropping" price increases, while Oracle charged that AWS has complex pricing models and less flexible offerings.
Moorhead noted that the deal is particularly bullish for Oracle stock.
"Cloud isn’t winner take all and this is a perfect example that it takes a village," Moorhead said. "The most sophisticated investors now see the durability of Oracle database in the cloud. … This event will see more bulls come out."
This partnership also reflects a broader strategy from AWS amid an AI boom that has left tech giants scrambling to be the first and have the best large language model, something Garman said he's not concerned about.
"There’s not going to be one model thats going to rule them all," Garman said. "We like to partner, not necessarily compete."
The strategy has AWS on track for $105 billion in annual revenue, and the stock is currently outpacing the Nasdaq year to date.
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