Oracle Corp (NYSE:ORCL) is splurging "billions" of dollars on Nvidia Corp (NASDAQ:NVDA) chips as it expands a cloud computing service targeting the artificial intelligence (AI) boom.

Oracle's cloud division is working to gain ground against larger rivals like Amazon.Com Inc (NASDAQ:AMZN) Amazon Web Services, and Microsoft Corp (NASDAQ:MSFT), Reuters cites, Oracle founder and Chair Larry Ellison said on Wednesday at an Ampere event. 

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Oracle has focused on building fast networks that can shuffle around the massive data needed to create AI systems similar to ChatGPT.

Oracle also buys vast graphics processing units (GPUs) to crunch that data for AI work.

Oracle is also spending "billions" of dollars on Nvidia chips but even more on central processor units (CPUs) from Ampere Computing, a chip startup it has invested in, and Advanced Micro Device Inc (NASDAQ:AMD).

In 2023, Ellison said that Oracle would buy GPUs and CPUs from three companies. It will purchase GPUs from Nvidia. 

Oracle looks to spend three times that on CPUs from Ampere and AMD and still spends more on conventional computing.

In June, Oracle disclosed a deal with Cohere, an AI startup founded by ex-Google engineers, under which Cohere will offer its AI software running on supercomputers inside Oracle's data centers with up to 16,000 Nvidia chips each.

In June, Oracle said fourth-quarter revenue increased 17% year-over-year to $13.8 billion, beating average analyst estimates of $13.73 billion. The company reported quarterly adjusted earnings of $1.67 per share, which beat consensus estimates of $1.58. Oracle highlighted that Nvidia leveraged the company's clusters for AI infrastructure. 

Price Action: ORCL shares traded higher by 0.39% at $116.98 premarket on the last check Thursday.