Why Jim Cramer’s Oracle (ORCL) Bullish Call is a Gamble Worth Taking—Despite the Data Center Risks

Clyde MorganFriday, Apr 18, 2025 10:38 am ET
9min read

The data center boom has become a defining theme of the tech sector in 2025, and Jim Cramer has thrown his weight behind Oracle (ORCL) as a prime beneficiary. While concerns about valuation, competition, and capital expenditure bloat linger, Cramer’s recent endorsement highlights Oracle’s strategic shift to cloud infrastructure and AI as a “solid long-term investment.” But is now the right time to “buy more” despite the risks? Let’s break it down.

The Bull Case: Oracle’s Strategic Pivot Pays Off

Cramer’s bullish stance hinges on two core strengths: cloud revenue growth and AI-driven demand.

  1. Cloud Infrastructure Growth: Oracle’s Oracle Cloud Infrastructure (OCI) reported 52% year-over-year revenue growth in its latest quarter, outpacing industry averages. CEO Safra Catz’s goal of hitting $25 billion in annual cloud revenue by fiscal 2025 is within striking distance, fueled by enterprises migrating to hybrid cloud systems.

  2. AI Supercomputing Dominance: Oracle’s announcement of a 65,000-GPU AI supercomputer—the largest ever built—positions it to capitalize on the AI gold rush. GPU consumption surged 336% in the quarter, reflecting soaring demand for compute power from AI developers.

  3. Stock Performance: ORCL has delivered a 25.8% return over six months, handily outperforming the S&P 500’s 6.4% gain during the same period. Cramer argues this trend could continue as data center demand remains “the single biggest investment story” for months.

The Bear Case: Valuation and Competitive Pressures

While Oracle’s growth is undeniable, risks loom large.

  1. High Valuation: Oracle’s EV/EBITDA multiple of 21.89x exceeds the industry average of 16.41x, suggesting investors have already priced in much of its upside. A miss on revenue or profit targets could trigger a sharp selloff.

  2. Capital Expenditure Bloat: Oracle spent $4 billion on capex in Q2 alone, with spending projected to double in fiscal 2025. This could strain near-term profits, even as it fuels long-term growth.

  3. Cloud Market Share: Oracle remains a distant third in the $200 billion cloud infrastructure market, trailing AWS, Azure, and Google Cloud. Its reliance on multi-cloud partnerships—essentially piggybacking on competitors—limits its ability to dominate the space.

  4. Alternatives with Better Short-Term Upside: Cramer noted that some “cheapest AI stocks” (trading below 5x earnings) have surged ahead of ORCL and even NVIDIA (NVDA), which fell ~25% since early 2025. While Oracle’s fundamentals are strong, investors seeking quick returns may find better options elsewhere.

Cramer’s Nuanced Take: Long-Term Play, Not a Sprint

Cramer’s endorsement of Oracle isn’t a call to “chase momentum” but a bet on its resilience in a secular growth sector. He acknowledges risks but emphasizes Oracle’s cash flow stability (despite a 6% decline in free cash flow) and its role in AI’s infrastructure backbone.

Analysts agree:
- Zacks Rank #3 (Hold) reflects balanced risks and rewards at current prices.
- Earnings estimates predict 8.85% revenue growth and 11.87% EPS growth for fiscal 2025, underscoring Oracle’s trajectory.

Conclusion: Buy ORCL, But Set Realistic Expectations

Oracle’s stock is a buy for investors with a multi-year horizon, provided they acknowledge the risks.

  • Bullish Catalysts:
  • Cloud revenue growth at 50%+ rates.
  • AI adoption driving GPU demand.

  • Oracle’s $25 billion cloud revenue target.

  • Bearish Risks:

  • EV/EBITDA multiple contraction if growth slows.
  • Margin pressure from capex spending.
  • Market saturation in cloud infrastructure.

Final Call: Oracle’s fundamentals align with Cramer’s thesis, but investors should avoid overpaying. With a 25.8% six-month return already priced in, targeting a 10–15% annualized return over three years seems prudent. For now, the data center story—and Oracle’s role in it—remains too compelling to ignore.

Investors are advised to monitor Oracle’s quarterly earnings and capex trends closely. A sustained decline in free cash flow or a slowdown in cloud growth could shift the calculus.