How Oracle Just Turned Into the Hottest AI Company in the Stock Market

After decades of steady software dominance, Oracle (ORCL) just shocked the world.

The company has reinvented itself with one of the biggest power moves in tech. And it's not just about cloud computing anymore. Oracle is now making waves in artificial intelligence ("AI") and digital health care... and investors are paying attention.

In fact, Oracle shares surged as much as 43% yesterday, posting their best day since 1992. The move made co-founder and chairman Larry Ellison the richest person on Earth, surpassing Tesla (TSLA) founder Elon Musk.

So how did Oracle, a company known for old-school databases, suddenly become a leading force in AI infrastructure and one of the hottest stocks of the year?

Let's break it down...

Oracle's $28 Billion Health Care Bet Pays Off

Back in 2022, Oracle made a massive acquisition that many saw as the beginning of a new era. It bought Cerner, a major player in electronic health records, for $28 billion.

Health care is the biggest market in the world, and Cerner already had deep ties to Oracle's tech. Its software, used in hospitals and clinics across the U.S., ran on Oracle databases. The two companies were already close... the acquisition just made it official.

That move gave Oracle an instant $6 billion revenue boost. But more importantly, it opened the door to international expansion and innovation.

Oracle quickly added voice technology to Cerner's tools, making them easier for doctors and nurses to use. That means less time typing and more time treating patients.

The result was that Oracle's total revenue jumped 36% since 2020, hitting $53 billion last year. Analysts expect it to reach $58 billion in 2025, and Oracle has its sights set on $65 billion by next year.

But this was just the beginning...

Oracle Is Now an AI Infrastructure Superpower

When most people think about AI stocks, they think of Nvidia (NVDA), Microsoft (MSFT), or Google's parent company Alphabet (GOOGL).

But Oracle is powering the infrastructure that these companies – and many others – rely on to train their AI models.

Instead of building its own flashy AI chatbot, Oracle is focusing on something even more valuable: the cloud infrastructure that makes AI possible.

It runs some of the most advanced data centers in the world, packed with high-performance chips and ultrafast computing power. Oracle's latest setups use more than 130,000 Nvidia Blackwell GPUs, which is more than three times the horsepower of even the world's most powerful supercomputers.

That muscle hasn't gone unnoticed.

Oracle recently signed a record-breaking $300 billion deal with OpenAI, the company behind ChatGPT. Over the next five years, Oracle will provide OpenAI with up to 4.5 gigawatts of cloud capacity – enough to support a small city. That contract alone could generate $60 billion annually starting in 2027.

And that's just one deal.

Oracle has also locked in multibillion-dollar contracts with Meta Platforms (META), xAI (Elon Musk's company), Nvidia, Advanced Micro Devices (AMD), and others.

These partnerships could push Oracle into the top tier of cloud-computing companies, right behind Amazon Web Services, Microsoft Azure, and Google Cloud.

CEO Safra Catz summed it up clearly on the latest earnings call yesterday, saying: "Oracle has become the go-to place for AI workloads."

Stock Surge Makes Ellison the World's Richest Person

Oracle's AI strategy is already paying off in a big way.

After the company announced these huge AI deals, its stock soared as much as 43% before closing up 36%. It's the biggest one-day jump since 1992.

That rally pushed Oracle into the top 10 most valuable companies in the S&P 500. It also launched Ellison past Musk on the Bloomberg Billionaires Index. Ellison's net worth spiked by $101 billion in one day, reaching a staggering $393 billion.

The man who once sold database software to banks briefly became the wealthiest person in the world, all thanks to cloud computing and AI.

Oracle's Cloud Business Is Just Getting Started

Oracle's cloud infrastructure revenue is already growing fast – up 54% over the same period a year ago. Its database cloud services are also gaining ground, with revenue up 32%. Total cloud revenue hit $7.2 billion last quarter, and the company says it's just the beginning.

According to Catz, Oracle's remaining performance obligations ("RPO") – essentially the money it's owed from already-signed contracts – jumped to $455 billion last quarter, a massive 359% jump from a year ago. Some analysts now believe RPO could exceed $500 billion soon.

That kind of predictable, long-term revenue backlog gives Oracle something most tech companies dream of.

Looking ahead, Oracle expects its cloud infrastructure business to grow 700% over the next four years, from $18 billion today to $144 billion by 2030.

And with demand far outpacing supply, Oracle is racing to build more gigawatt-scale data centers around the world. These massive facilities are designed specifically for training the most advanced AI models, making Oracle a key player in the AI arms race.

Why Oracle Is Now a Must-Watch AI Stock

Oracle is no longer just a "legacy tech" stock. It's now part of the AI growth story, with a foothold in cloud computing, enterprise software, and health care technology.

The company's business model is incredibly strong. Once a customer starts using Oracle's software, it's hard to switch. That "stickiness" keeps revenue flowing for years. Add in subscription cloud services and support contracts, and you have one of the most reliable recurring revenue models in tech.

Even better, Oracle's business is already super profitable.

Its gross margins sit around 70%, and its operating cash margins hit 35% last year. In other words, for every $1 of revenue Oracle generates, it pockets $0.35 in profits.

Is Oracle a Buy Today?

From a financial perspective, Oracle's stock looks expensive, but for good reason.

With shares nearly doubling so far this year alone – and up more than 500% over the past five years – Oracle sports a premium valuation. At 48 times forward earnings and 16 times sales, it's trading for more than double its average valuation over the past five years.

But that doesn't scare us.

According to the Stansberry Score, Oracle earns a solid "B" grade. That suggests strong fundamentals, solid growth potential, and better-than-average returns ahead...

The company has pulled off one of the greatest second acts in Silicon Valley history. It has successfully gone from a database dinosaur to an AI cloud powerhouse, thanks to bold bets in health care, smart infrastructure investments, and billion-dollar contracts with the biggest names in tech.

If you're searching for AI stocks with long-term upside, Oracle deserves a spot on your radar. While many companies are simply riding the AI wave, Oracle is helping build it.

And with growth accelerating, profits climbing, and contracts locked in for years, Oracle might end up being the tech stock of the decade.

Regards,

Sam Latter

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