Oracle’s AI Breakout Quarter: What’s Going On?

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Subtle Reality
September 11, 2025

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Featured

  • Huge backlog and monster contracts
    Oracle reported Remaining Performance Obligations (contracted revenue not yet recognized) of $455 billion, more than four times higher year over year. (wsj.com)
    It also signed several multibillion dollar AI cloud contracts in this quarter, including with OpenAI, xAI, Meta, and Nvidia.

  • OpenAI and Oracle mega deal
    One standout deal is OpenAI’s agreement to purchase $300 billion of computing power from Oracle over about five years, starting in 2027. (wsj.com)
    This agreement is part of Oracle’s broader AI infrastructure growth, including its Stargate data center expansion.

  • Stock market response
    Oracle shares jumped about 36 to 43 percent in reaction to the announcements, reaching all time highs. (wsj.com)
    Analysts also raised their price targets significantly, with some suggesting $335 to $410 per share as achievable. (investopedia.com)

  • Cloud revenue pickup but concerns about margins and investment
    The cloud infrastructure business grew strongly (cloud revenue rose 28 percent compared to a year ago in the quarter covered by WSJ) but overall revenue and earnings per share slightly missed analyst expectations.
    Oracle plans large capital expenditures, about $35 billion forecast for fiscal 2026, to support cloud and data center expansion. (barrons.com)

💡 My Take

This looks like Oracle’s moment. After years of trailing AWS, Azure, and Google in cloud and infrastructure, Oracle has surged thanks to the AI boom. The company now has large customer commitments locked in, which gives it financial runway and visibility.

But risks remain:

  • Heavy reliance on a few major customers (especially OpenAI) could be a vulnerability if deals are renegotiated or delayed.

  • Massive capital spending may pressure margins.

  • Delivering on its ambitious cloud growth targets will require careful execution.

Featured

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📣 My Take:

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