Oracle (ORCL) Surged Following Accelerated Demand

Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The equity market continued its strong performance in the third quarter of 2025, driven by enthusiasm for generative AI and strength in the semiconductor sector. In the quarter, the focus shifted to positive economic surprises, fiscal policy optimism, and better-than-expected corporate earnings. In the quarter, the strategy returned 3.34% (gross) and 3.14% (net) compared to 10.51% for the Russell 1000 Growth Index and 8.12% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Polen Focus Growth Strategy highlighted stocks such as Oracle Corporation (NYSE:ORCL). Oracle Corporation (NYSE:ORCL) offers products and services that address enterprise information technology environments. The one-month return of Oracle Corporation (NYSE:ORCL) was 0.44%, and its shares gained 76.93% of their value over the last 52 weeks. On October 13, 2025, Oracle Corporation (NYSE:ORCL) stock closed at $308.01 per share, with a market capitalization of $878.073 billion.

Polen Focus Growth Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its third quarter 2025 investor letter:

"On the economic growth front, the US economy surprised to the upside, growing at a revised annual rate of 3.8% in Q2. While the headline numbers were reassuring for investors, it included an artificial boost thanks to a sharp decline in imports, which was essentially an unwinding of the huge surge in Q1 as businesses stockpiled inventory ahead of anticipated tariffs. However, what was most notable in the data was the contribution from technology capex, and AI-related spending in particular, outpacing the contribution from consumer spending despite its much smaller share of the total economy, reflecting the sheer magnitude of capital currently flowing into AI-related projects.

The best illustration of this continued investment was Oracle Corporation's (NYSE:ORCL) quarterly earnings report, which showed remaining performance obligations (mainly contracted future cloud revenues) increasing 359% to $455 billion in just one quarter, with the stock rallying about 38% on the news. The sheer scale highlights extraordinary demand for cloud computing and AI infrastructure that shows no signs of slowing down. Fortunately, Oracle was one of Focus Growth’s largest holdings prior to these results, providing an important boost to performance this quarter and year-to-date.

Following on from Q2’s +56% rally, Oracle was again our top owned relative contributor post their impressive quarterly results showing a huge acceleration in demand for their cloud infrastructure services, with the stock up ~29% in Q3. When reacquiring Oracle in September last year, our investment thesis was predicated on an anticipated acceleration in growth across their application, database and cloud infrastructure businesses (and the expectation that cloud infrastructure would be growing the fastest) – very clearly that thesis is playing out, with Oracle in the midst of a substantial acceleration in revenues."

Oracle Corporation (NYSE:ORCL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 124 hedge fund portfolios held Oracle Corporation (NYSE:ORCL) at the end of the second quarter, up from 97 in the previous quarter. While we acknowledge the potential of Oracle Corporation (NYSE:ORCL) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Oracle Corporation (NYSE:ORCL) and shared the list of AI stocks every investor should watch. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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