Oracle's Cloud Surge: The Ultimate Play in the U.S.-China Tech Cold War

The race to dominate global cloud infrastructure has never been hotter—and Oracle (ORCL) is firing on all cylinders. With U.S.-China tech tensions escalating, Oracle's recent moves in cloud computing aren't just about growth—they're a geopolitical statement. Let's unpack why this stock could be a gold mine for investors betting on American tech sovereignty—and why the competition from Alibaba Cloud is no match.

The Geopolitical Edge: Oracle's “Air-Gapped” Play for U.S. Security

Oracle's Compute Cloud@Customer Isolated is a game-changer. Imagine a cloud environment that can be completely disconnected from the internet—ideal for governments, defense agencies, and industries like healthcare or finance. This isn't just about security; it's about control. The U.S. government and allies are desperate to reduce reliance on Chinese cloud providers like Alibaba, which often face data sovereignty concerns. Oracle's solution? Build infrastructure that's physically and logically walled off.

The numbers back this up: Oracle's dedicated cloud regions saw 104% year-over-year revenue growth in 2025, and they're doubling their data centers from 29 to 59 by 2026. CEO Safra Catz isn't just talking—she's betting $25 billion of Oracle's cash on this strategy. This isn't a side hustle; it's the main event.

The Financials: Growth That's Hard to Ignore

Oracle's cloud business is on fire. In fiscal 2025, cloud infrastructure revenue hit $10.2 billion, a 51% surge from the prior year. And Catz isn't slowing down: she's targeting 70% growth in cloud infrastructure revenue in 2026, with total cloud revenue growth jumping to over 40% from 24% in 2025.

Here's why this matters: Oracle's cloud is eating into legacy software revenue—and winning. The company's “Remaining Performance Obligations” (RPO)—a measure of future contracted revenue—are set to double, showing customers are locking in long-term deals. This isn't just about selling servers; it's about locking in decades of recurring revenue.

Why Alibaba Can't Compete (Yet)

Alibaba Cloud dominates in China, with 28 regions and 86 availability zones. But in the U.S.-led tech cold war, geopolitical risk is a feature, not a bug. Oracle's partnerships with Google Cloud and IBM are about more than just tech—they're about building a multi-cloud ecosystem that's trusted by the U.S. government. Meanwhile, Alibaba's access to Western markets is shrinking under sanctions and data sovereignty laws.

Take Oracle's Watsonx AI partnership with IBM: this gives U.S. companies AI tools that don't rely on Chinese infrastructure. And Oracle's Compute@Customer is tailor-made for defense contractors—something Alibaba can't touch.

Risks: Don't Get Burned

Oracle isn't without pitfalls. First, geopolitical tensions could ease, reducing the urgency for U.S. companies to spend on “air-gapped” security. Second, Oracle's stock isn't cheap—its P/E ratio is above 25, which is rich for a “old-school” software company. And third, execution is everything: building 47 new data centers by 2026 is a massive undertaking.

The Bottom Line: Buy ORCL If You're Betting on Decoupling

Oracle is a must-own stock for investors who believe the U.S.-China tech decoupling is here to stay. Its cloud growth is real, its partnerships are strategic, and its valuation—while not a steal—looks justified given the tailwinds.

Action Plan:
- Buy now if you have a 3–5 year horizon.
- Wait for a dip below $100 (current price: ~$110) to average in.
- Avoid if you're short-term focused or fear a tech slowdown.

The U.S. tech sovereignty play isn't just a fad—it's a multi-decade trend, and Oracle is the 800-pound gorilla in the room. This isn't just about clouds—it's about who controls the future.

Final Note: The stakes are high, and Oracle is all-in. But remember—investing in tech wars requires nerves of steel. Proceed with eyes wide open.