Throughout this year, when investors looked for potential winners in the field of artificial intelligence, companies like NVIDIA (NVDA) and Palantir (PLTR) were almost always the focus, and they remain favored AI stocks to this day. However, in recent months, another established tech company with a history of nearly fifty years—Oracle—has been capturing widespread market attention with its rapid rise in AI infrastructure.
As a technology enterprise long dedicated to database management software and continuously expanding its cloud services, Oracle (ORCL) has demonstrated the potential to become a significant force in the AI field. Earlier this year, the company announced substantial revenue growth driven by strong demand for its services from AI customers, propelling its stock price to a single-day surge of over 35%. Although the stock later experienced some pullback due to market concerns about the profitability of its AI contracts, its momentum in the AI infrastructure sector remains remarkable.
Oracle’s breakthrough progress in artificial intelligence is attributed to its forward-looking cloud infrastructure strategy. With the surging demand for computing power from AI customers, Oracle has become a key beneficiary thanks to its infrastructure advantages. In its latest quarterly earnings report, its cloud infrastructure revenue grew 55% year-over-year to $3.3 billion, while its remaining performance obligations representing unrecognized revenue surged by 359% to a staggering $455 billion. These figures not only excited the market but also reflected the strong momentum of its business development. CEO Safra Catz, who is soon transitioning to the role of Executive Vice Chairman of the Board, described the quarter’s performance as “shocking” and anticipates signing more new customers worth billions of dollars in the future, with the value of unfinished contracts potentially exceeding the $500 billion mark.
Although the market has recently expressed doubts about its sales gross margins—with some analyses pointing out that the average gross margin for its major computing contracts is approximately 16%—this is a common phenomenon in the early stages of the AI industry’s development. As business scales up, customers’ AI projects deepen, and new revenue opportunities continue to emerge, profit margins are expected to gradually improve. From initial model training to the current rapid growth in inference demand, Oracle’s service scope is continuously expanding, creating favorable conditions for future profit improvement. It is worth noting that professional institutions such as Mizuho Bank continue to maintain an optimistic rating on the stock, emphasizing the immense growth potential of the AI market in the future.
Looking ahead, the Oracle AI World conference and financial analyst meeting scheduled for October 16 will serve as important milestones. The company has clearly stated that it will update its long-term financial forecasts during the event. Given the positive assessment of sustained growth in AI demand in recent earnings reports, this meeting is expected to further alleviate market concerns. Regardless of short-term stock performance, Oracle’s solid positioning and continuous growth in the AI infrastructure sector lay a strong foundation for its long-term value enhancement. Against the backdrop of accelerating advancements in artificial intelligence technology, this nearly half-century-old tech enterprise is demonstrating remarkable new vitality.
