Analyst Says Oracle (ORCL) Among Top AI Industry Names - Here's Why

We recently published Analysts Are Talking About These 10 Stocks as AI Investments Continue to Grow. Oracle Corp (NYSE:ORCL) is one of the stocks analysts were recently talking about.

Adam Crisafulli of Vital Knowledge was recently asked about Oracle Corp (NYSE:ORCL) stock gains following its earnings report and forecasts. Here is what the analyst said:

“There was an article on the Information about OpenAI spending about $450 billion over the next five years on compute. Remember that was the huge part of the RPO boost at Oracle. A lot of that was driven by OpenAI. So that’s another positive suggesting that the biggest, most prominent player in the industry continues to spend a lot of money. XAI, there were a lot of articles about them raising money at a $200 billion valuation. And then right before the close, there was a report on Bloomberg about how Oracle could be striking a deal with Meta for a $20 billion AI compute contract. So the headline and news flow around AI just remains extremely bullish and Oracle really has risen to become one of the most prominent names in the industry and that continues to drive the shares higher.”

Why are some analysts reluctant about the Oracle-OpenAI deal? OpenAI is expected to burn about $115 billion over the next four years and is not projected to be profitable until 2030. Even after Nvidia’s latest $100 billion investment by Nvidia,  OpenAI will likely need to raise over $200 billion in total funding to cover its commitments. Some analysts believe Oracle may need to borrow tens of billions to build enough data centers for the deal. ORCL is up 70% so far this year, and its P/E (TTM) is about 80% higher than the sector median of 24.4, according to data from SeekingAlpha.

Loomis Sayles Growth Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its second quarter 2025 investor letter:

“Oracle Corporation (NYSE:ORCL) is a leader in the enterprise software market with a strong market position in database, infrastructure and application software, and cloud-based software and services. We believe the company’s competitive advantages include its large and experienced direct sales force, a founder-driven management team that reinvests relentlessly to maintain a leading intellectual property (IP) portfolio and differentiated product suite, and a large installed base of clients with high switching costs where it consistently achieves renewal and retention rates in the mid-90% range. We believe Oracle is well positioned to benefit from the continuing growth in data storage and enterprise application software, as well as the shift to cloud-based solutions.

A long-term fund holding, Oracle reported strong quarterly financial results that were above management guidance and consensus expectations on most measures, including remaining performance obligation (RPO) bookings, a forward-looking measure of revenue. As a result, the company expects revenue growth to accelerate and raised its guidance to at least 16% revenue growth in its 2026 fiscal year, driven by cloud growth in excess of 40%. Oracle is the world leader in its largest business segment, enterprise database software used in customer on-premise IT environments. However, the company continues to focus on transitioning its business from a traditional on-premise, up-front software licensing and maintenance revenue model to a cloud computing subscription-based model where software revenue is recognized over the life of the client’s contract. While there has been pressure on year-over-year overall revenue comparisons during this transition, which started over a decade ago as Oracle released cloud versions of its applications and infrastructure software, as up-front license revenue shifts to subscription revenue, we have long expected this to lead to faster growth over time due to a higher customer lifetime value as the transition progresses. We believe the cloud model also allows Oracle to monetize its services and technology more efficiently and yield savings to the customer… (Click here to read the full text)

While we acknowledge the potential of ORCL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.