Oracle’s shares jumped nearly 9% on Wednesday, driven by increased demand for its cost-efficient cloud infrastructure services, particularly among AI-focused startups. This surge has the potential to increase Oracle’s market capitalization by over $28 billion, adding to its current $340 billion valuation. The company’s shares have risen 18% since the start of the year, leveraging the success of its cloud infrastructure unit, which provides competitively priced computing and storage solutions. This positions Oracle against industry giants like Google, Microsoft, and Amazon.

Oracle’s cloud infrastructure has attracted attention from AI startups, including Elon Musk’s xAI, due to its affordability compared to rival services. In a strategic development, Oracle recently announced collaborations with OpenAI, the creator of ChatGPT, and Google Cloud to enhance its cloud offerings. This partnership bolsters Oracle’s standing as a platform for AI and expands the distribution of its database services, as noted by Evercore analyst Kirk Materne.

Despite Oracle’s forward earnings estimates being 19.59 times lower than those of its main competitors, its fourth-quarter results fell short of expectations. The company faces increasing competition from more affordable alternatives in its legacy database and enterprise resource planning (ERP) software business. Morningstar analyst Julie Sharma predicts that Oracle might experience customer attrition as businesses undergo digital transformations, opting for less expensive database and ERP solutions over Oracle’s offerings.