Welcome back to the podcast where we dive deep into the intersections of technology, economy, and the stock market. I’m your host, and today we’re unpacking a story that’s been buzzing in the tech and investment world: Oracle, a company once considered a relic of Silicon Valley’s past, is now being hailed as the hidden gem of the AI revolution. If you’re looking for the next big play in AI stocks, stick around because this episode is packed with historical context, market impacts, sector-specific insights, and actionable advice for investors. Let’s get started.
Introduction: Oracle’s Unexpected AI Resurgence
When you think of AI stocks, names like NVIDIA, AMD, or even Microsoft probably come to mind. Oracle? Not so much—at least not until recently. Founded in 1977 by Larry Ellison, Oracle started as a database company with a contract for the CIA. It wasn’t flashy, it wasn’t consumer-facing, but it was mission-critical. Fast forward to the late ‘80s, and Oracle had become the world’s largest database management company. Through aggressive acquisitions—think PeopleSoft for $10 billion, Sun Microsystems for $7 billion—Oracle built a complete technology stack that made it the backbone of enterprise computing. Banks, governments, and Fortune 500 companies all relied on Oracle to run their operations.
But by the early 2010s, Oracle’s stock was stagnant. The cloud computing wave, led by Amazon’s AWS and Microsoft’s Azure, made Oracle look like a dinosaur. Ellison himself didn’t help, publicly dismissing cloud computing as “gibberish.” The tech press wrote Oracle off as the Kodak of enterprise software. Yet, as we’ll explore today, Oracle’s skepticism wasn’t denial—it was a calculated bet that’s paying off in spades with the AI boom. Under CEO Safra Catz, Oracle’s pivot to a next-generation cloud infrastructure has positioned it as a dark horse in the AI race. So, how did this happen, and what does it mean for investors?
Market Impact: Oracle’s AI Infrastructure Play
Let’s set the stage with some historical context. The cloud computing market exploded in the 2010s, with AWS growing at triple-digit rates and Azure scaling rapidly. Oracle, however, was late to the party. When they finally entered with their Generation 2 Cloud in 2016, they didn’t just mimic their competitors. Instead of building virtualized, multi-tenant platforms optimized for web apps, Oracle went for bare-metal infrastructure with direct hardware access and a non-oversubscribed network. This meant lower latency, higher performance, and guaranteed bandwidth—overengineering for what seemed like a niche market at the time.
Fast forward to 2022, when ChatGPT launched and the AI race kicked into high gear. Training large language models (LLMs) requires massive computational power—thousands of GPUs working in sync for weeks. Suddenly, Oracle’s “overengineered” infrastructure wasn’t just relevant; it was essential. While AWS and Azure scrambled to retrofit their platforms, Oracle’s Gen 2 Cloud was already purpose-built for these workloads. The numbers speak for themselves: Oracle offers 57% cheaper compute than AWS for AI training, 75% cheaper than Azure, and delivers four times more cluster networking bandwidth than AWS. This isn’t just a technical edge; it’s a cost and performance advantage that’s drawing major players, including OpenAI, which partnered with Oracle for its $500 billion Stargate initiative.
Globally, Oracle’s impact is expanding. With sovereign AI—where countries demand data remain onshore—becoming a priority, Oracle is investing heavily in data centers worldwide. They’ve committed $6.5 billion in Malaysia, $5 billion in the UK, and $3 billion in Germany and the Netherlands. Their capital expenditure is set to double in 2025, exceeding $25 billion by 2026. This aggressive expansion signals Oracle’s ambition to outbuild competitors in AI infrastructure, even at the cost of short-term margins. For the broader market, this underscores how AI isn’t just a tech trend—it’s a geopolitical and economic force reshaping global investment flows.
Sector Analysis: Enterprise Software Meets AI
Let’s zoom into the sector-specific effects. Oracle isn’t just an infrastructure play; it’s a unique hybrid in the AI space. On one hand, its cloud infrastructure business grew 52% year-over-year to $3 billion in Q4 2024, outpacing Azure (31%), Google Cloud (29%), and AWS (17%). On the other hand, Oracle’s legacy enterprise software—think databases, ERP, and CRM systems—has become a strategic asset in the AI era. Why? Because it houses some of the world’s most valuable data: transaction records, customer profiles, and supply chain logistics for banks, governments, and defense contractors.
With innovations like Oracle Database 23 AI, which integrates native AI vector search capabilities, Oracle is bringing AI directly to where this data lives. This is a game-changer for traditional industries. Imagine a bank or hospital wanting to adopt AI without risking data migration to an unproven startup. Oracle offers a seamless, secure solution baked into the systems they’ve trusted for decades. As Larry Ellison noted in a recent earnings call, all of Oracle’s applications are becoming AI agents—automating tasks like recording prescriptions in healthcare or streamlining financial models in banking.
This dual strength—infrastructure and data—sets Oracle apart from pure-play AI infrastructure companies like NVIDIA or CoreWeave. It’s not just providing the raw materials for AI; it’s enabling the practical application of AI in legacy sectors. For the enterprise software sector, Oracle’s resurgence could pressure competitors like SAP or Salesforce to accelerate AI integration. Meanwhile, in the cloud infrastructure space, Oracle’s cost and performance advantages challenge the dominance of AWS and Azure, potentially reshaping market share dynamics over the next decade.
Investor Advice: Should You Bet on Oracle?
Now, let’s talk strategy for investors. Oracle’s stock has already seen a remarkable run, rising from $80 in summer 2021 to $230 in summer 2025—a nearly 3x increase. Looking ahead, analysts project Oracle’s revenue could grow from $57 billion to $128 billion by 2029, assuming 40% annual growth in cloud and 10% in non-cloud segments. If its price-to-sales ratio rises from 10 to 13, aligning with AI hyperscalers like Microsoft, Oracle could be valued at $1.67 trillion, or roughly $600 per share—a potential 3x increase from today.
But there are risks. Oracle’s capex is outpacing cash flow, pushing free cash flow into negative territory temporarily. This aggressive spending could strain margins if AI demand doesn’t meet expectations. Additionally, while Oracle’s infrastructure is cutting-edge, it faces fierce competition from AWS and Azure, which have deeper ecosystems and brand loyalty. Geopolitical risks, like trade tensions or data sovereignty laws, could also impact global expansion.
My advice? If you’re a long-term investor, Oracle offers a compelling risk-reward profile. Its unique positioning—spanning infrastructure and enterprise data—makes it a diversified AI play compared to pure infrastructure stocks like NVIDIA, which are more exposed to hardware cycles. Consider a phased entry: allocate a portion of your portfolio now, but keep cash on hand to buy on dips if short-term volatility hits due to capex concerns. For conservative investors, monitor Oracle’s 2025 earnings for confirmation of sustained cloud growth (projected at 24%) and infrastructure momentum (projected at 70% in 2026). Lastly, diversify your AI exposure—pair Oracle with other thematic plays like semiconductor stocks or AI software startups to hedge sector-specific risks.
Conclusion: Oracle as the Key to AI’s Future
As we wrap up, let’s reflect on Oracle’s journey. A decade ago, it was written off as a has-been. Today, it’s growing faster than its big tech peers and partnering with visionaries like Sam Altman on moonshot projects like Stargate. Oracle’s story reminds us of a timeless truth in tech investing: the decisions made today shape outcomes years down the line. Their 2016 bet on Gen 2 Cloud couldn’t have predicted the AI boom, but it’s now perfectly positioned to capitalize on it.
For listeners, Oracle isn’t just a stock—it’s a lens into how AI will transform traditional industries. If AI is to deliver on its promise, it must drive value for banks, governments, and legacy businesses, and Oracle might just be the bridge to that future. So, whether you’re hunting for the next multi-bagger or simply curious about tech’s evolution, keep Oracle on your radar. Thanks for tuning in, and don’t forget to join our community for more deep dives like this. Until next time, stay curious and invest wisely.