Projected Growth Post-CorrectionKey arguments in support of the idea.
Remaining in Focus: Announced $500 Billion Investment in AI Infrastructure.
Primary Cloud Infrastructure Development Partner for All Big Tech Companies.
Investment Thesis
Oracle Corporation (ORCL), an American technology titan, excels in crafting and marketing software, cloud solutions, and enterprise databases. Renowned as a top producer of database management systems (DBMS), the company offers a diverse array of business products including ERP, CRM, and cloud computing solutions. Since its inception in 1977, Oracle has been at the forefront in advancing artificial intelligence, data analytics, and cybersecurity technologies. In the competitive landscape, the company stands its ground against giants like Microsoft, SAP, and Amazon Web Services, continuing to be a pivotal force in the enterprise software sector.
Remaining in Focus: Announced $500 Billion Investment in AI Infrastructure. On January 21, 2025, U.S. President Donald Trump announced a private sector investment of up to $500 billion to fund infrastructure for artificial intelligence. This initiative sees a strategic collaboration between OpenAI, Oracle Corporation, Japanese multinational conglomerate SoftBank, and the UAE-based MGX investment fund, culminating in the establishment of the Stargate joint venture. The project is designed to build both the physical and virtual infrastructures necessary to propel the next wave of AI advancements. An initial capital infusion of $100 billion will kickstart the project, with the first facility being a data center located in Texas. For Oracle, this venture presents substantial opportunities, positioning the company as a primary infrastructure provider for the AI ecosystem. The substantial capital flow and investment into AI infrastructure underscore the growing strategic importance of AI within the U.S. economy, reaffirming the nation's ambition to maintain its leadership in global tech. Positive progress or milestones within the Stargate project could serve as a significant catalyst, potentially driving Oracle's stock price upward as it capitalizes on its role in this transformative initiative.
Primary Cloud Infrastructure Development Partner for All Big Tech Companies. Amazon, Microsoft, Google, and Meta Platforms stand in alliance with Oracle, serving both as partners and clients in the global expansion of data center infrastructure. OCI, Exadata, and the full suite of the company’s database services will be seamlessly accessible to all users of these tech giants. Partnerships with major technology firms are poised to become its pivotal growth catalysts nearing the latter half of FY2025, coinciding with the large-scale commissioning of new data centers. The recent earnings season, unfolding at the dawn of 2025, revealed that Amazon, Microsoft, Google, and Meta Platforms are set to significantly ramp up their investments in data center infrastructure, surpassing even the most optimistic projections. This trend signifies promising prospects for Oracle as their key partner, potentially enhancing the company's quarterly results and leading to upward revisions to guidance.
The target price for the shares is $210, the rating is Sell. We recommend setting a stop loss at $130.
