Oracle's Cloud Infrastructure Booming with AI Demand, Projected Growth to Drive Stock Gains

Oracle's cloud infrastructure demand is booming due to AI, with the company quickly adding capacity to corner a larger share of the cloud infrastructure market. Oracle's growth acceleration should help the stock deliver more gains in the long run. Oracle's cloud infrastructure is in high demand due to its flexibility, customization, and cost savings compared to competitors. The company's RPO stood at $138 billion at the end of Q4 FY25.

Oracle's cloud infrastructure demand is booming, driven by the increasing adoption of artificial intelligence (AI) applications. The tech giant is rapidly expanding its capacity to capture a larger share of the lucrative cloud infrastructure market. This growth acceleration is expected to boost Oracle's stock performance in the long run.

The demand for Oracle's cloud infrastructure is fueled by its flexibility, customization, and cost savings compared to competitors. The company's platform allows customers to train and deploy AI models efficiently, leveraging a wide range of chips from Nvidia and Advanced Micro Devices. Oracle's customers can rent its cloud infrastructure for various AI applications, including generative AI models and agentic AI applications.

The company's remaining performance obligations (RPO) stood at $138 billion at the end of the fourth quarter of fiscal 2025, reflecting the substantial unfulfilled contracts at the end of the period. Oracle is projecting a significant increase in its RPO for the current fiscal year, as it expands its data center regions globally to meet the growing demand for AI infrastructure.

Oracle's cloud infrastructure is poised to become the Amazon of the AI infrastructure market, given its growing dominance in this space. The company's focus on expanding its infrastructure should enable it to capture a larger share of the cloud infrastructure-service-as-a-service (IaaS) market, which is expected to generate $580 billion in revenue by 2030.

Despite the positive outlook, Oracle has faced challenges in managing costs amid heavy AI infrastructure spending. The company has begun cutting jobs in its cloud unit to rein in expenses, following similar cost-control measures by other tech giants like Microsoft and Amazon. Oracle's recent advancements in AI and cloud services have been notable, with a mega contract expected to further accelerate growth. However, the company's shift to cloud may hurt margins in the near term.

Investors should remain cautious and watch for any catalysts in Oracle's upcoming guidance or industry shifts in cloud/AI demand for clearer direction. The mixed signals from analyst ratings and technical indicators suggest a cautious approach for near-term traders.

References:
[1] https://www.nasdaq.com/articles/company-could-be-amazon-ai-infrastructure
[2] https://www.ainvest.com/news/oracle-cloud-layoffs-sign-big-tech-cost-controls-ai-expenses-2508/
[3] https://www.ainvest.com/news/oracle-strategic-workforce-shift-ai-infrastructure-bet-high-conviction-buy-opportunity-cloud-ai-convergence-era-2508/