Oracle's stock surged after the company announced a $100 billion joint venture with SoftBank and OpenAI to expand data centers and fuel its cloud business. The venture, aiming for $500 billion in value, aims to position Oracle as a major player in cloud computing alongside rivals like Amazon and Microsoft. The news was further boosted by President Trump's openness to Oracle chairman Larry Ellison buying TikTok. While analysts remain cautiously optimistic, the stock's rally has outpaced earnings expectations, raising concerns about valuation.
out of the gate in 2025, after its best year in a quarter of a century. A plan unveiled with US President Donald Trump has intensified hopes that its cloud business will see a tailwind from artificial intelligence.
“This certainly has us looking at the name in a way we hadn’t before, since this could represent a meaningful inflection in growth,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder. “It seems like it is in good company here, but my main hesitation is about how long this halo might last, since the stock has really rocketed.
However, there are questions about the scope of new commitments and whether the news represents a dramatic increase from previously announced plans. Elon Musk publicly questioned whether the companies could follow through on their promises, while Anthropic’s CEO also queried the financing and said the project seemed “a bit chaotic”.
Compared to the big three of Amazon, Microsoft and Google, Oracle is a small player in cloud computing. It has a less than 5% share in the infrastructure-as-a-service market, compared with Amazon Web Services at more than 40% and Microsoft around 16%, according to Bloomberg Intelligence — which also estimated the venture could help grow its cloud infrastructure sales from a roughly $10-billion annual run rate currently to $30-billion or $40-billion over the coming years.
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