Oracle’s Cloud Ambitions Get a Boost from AI Joint Venture
A New Era of Growth
Oracle Corp. is off to a strong start in 2025, building on its best year in a quarter-century. The software giant’s latest move has sparked optimism about its cloud business, which is expected to receive a significant boost from artificial intelligence.
A $100 Billion Joint Venture
Oracle has formed a $100 billion joint venture with SoftBank Group Corp. and OpenAI to expand its data centers and support its cloud business. This move is seen as a significant step towards establishing Oracle as a major player in cloud computing, an area where it currently lags behind rivals.
A Meaningful Inflection in Growth
According to Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, “This certainly has us looking at the name in a way we hadn’t before, since this could represent a meaningful inflection in growth.” Oracle shares have performed impressively, up over 10% in January, following a nearly 60% gain last year.
A Small but Growing Player
Compared to the big three of cloud computing – Amazon, Microsoft, and Alphabet Inc. – Oracle is a small player, with a less than 5% share in the infrastructure-as-a-service market. However, the joint venture is expected to help grow its cloud infrastructure sales from a roughly $10 billion annual run rate to $30 billion or $40 billion over the coming years.
A Clear Positive
Jim Awad, senior managing director at Clearstead Advisors, believes that “this moves Oracle even closer to the ballpark that Amazon, Microsoft, and Alphabet are mentioned in.” While there may be some hype surrounding the announcement, it is still a clear positive for the company.
Cautious Optimism
Despite the optimism, some analysts are taking a cautious approach. Joe Tigay, portfolio manager of the Rational Equity Armor Fund, advises waiting to see the actual earnings and company statements before pricing in the impact of the joint venture.
Tech Stocks in Focus
In other tech news, Apple Inc. has slumped almost 11% in January, putting the stock on track for its biggest one-month decline since December 2022. Meanwhile, SK Hynix Inc.’s shares slid despite record quarterly results, as investors grapple with stagnant smartphone demand and questions about AI spending in 2025.
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