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- A Full Analysis of Oracle ($ORCL)
Hi Everyone!
Welcome back to another edition of Grit Alpha. After so much demand from the audience, we’re breaking down Oracle!
Stock Deep Dive: Oracle (ORCL-US, $796B MCAP)
Old is new again.
This week’s pick is known primarily for more legacy-type systems, but the management team must have read “The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail”, because they sure aint falling behind anymore.
A new megadeal has made many analysts go back to the drawing board to sharpen their pencils on this company that was founded all the way back in 1977.
For frame of reference, the internet was invented in 1983 which marked the official adoption of TCP/IP as the standard for ARPANET.
The Innovator’s Dilemma largely discusses why incumbents get stuck in their own ways and largely miss out on the coming wave.
Few companies can break out of this. This is one of them.
Why now? 👉 Stargate Opportunity
Overview 👉 What Does Oracle Do?
How Do They Win? 👉 Value Proposition
Business Units 👉 Segment Breakdown
Cloud business 👉 The Growth Engine
How Do They Make Money? 👉 Revenue Model Breakdown
By The Numbers 👉 Key Metrics
Risks 👉 Potential Pitfalls
Why now? 👉 Stargate Opportunity
In mid-2025 Oracle engineered a surprising comeback. The company quietly disclosed a cloud-services deal expected to deliver roughly $30B per year. OpenAI later confirmed this is for the “Stargate” project, a massive $500B+ AI datacenter initiative under which Oracle will build 4.5 gigawatts of new data center capacity. In practical terms, Oracle will be supplying millions of NVIDIA GPUs and high-performance servers to power next-generation AI models. This extraordinary deal has transformed Oracle from a legacy database vendor into a premier AI infrastructure partner. Following the news, ORCL stock surged to record highs as investors realized that Oracle’s cloud pipeline now includes unprecedented contracts. CEO Safra Catz even hinted that Oracle’s multi-cloud database business (running Oracle software on AWS/Azure) grew over 100% recently, underscoring that every part of the company is getting an AI boost.
Oracle is now pouring gasoline on the fire of its cloud transition. In FY2025 the company spent $21.2B on capital expenditures and is budgeting $25B for FY2026. Most of that spend is on new data center hardware, not only for OpenAI’s sake, but also to serve its growing enterprise customer base. With billions of dollars already contracted via Stargate, Oracle has an enormous runway of booked revenue.
The timing could not be better: Oracle is leveraging its database/software moat to capture the AI wave. Oracle’s cloud momentum makes it a compelling play in a sector where AI is the new battleground.
Overview 👉 What Does Oracle Do?
Oracle is one of the world’s largest enterprise software companies, and it has been rapidly moving into cloud services. Traditionally, Oracle made its name with Oracle Database and other on-premises middleware and applications. Today, Oracle sells a comprehensive stack: its core offerings include the flagship Oracle Database (for storing and querying business data) and a broad suite of ERP, HCM, CRM and supply-chain software. Over the last several years it has repackaged those products for the cloud: Oracle Cloud offers Infrastructure-as-a-Service (compute, storage, networking, GPUs) and Software-as-a-Service (Fusion Cloud ERP, NetSuite ERP, customer experience tools, etc.). In the company’s words, it provides “integrated suites of applications plus secure, autonomous infrastructure” in the cloud.
This means Oracle aims to be a one-stop shop for large enterprises: from mission-critical databases to business applications and cloud hosting. Its history of acquisitions (PeopleSoft, NetSuite, Sun Microsystems, etc.) gave it a “full stack” of enterprise IT. Oracle is now one of the largest enterprise-grade database, middleware and application software providers, and has significantly expanded its cloud operations in recent years. In addition, Oracle sells specialized hardware (like its Exadata database servers) and provides consulting/support services. All told, Oracle’s customer base spans tens of thousands of companies worldwide, including a vast majority of the Fortune 1000.
How Do They Win? 👉 Value Proposition
Oracle’s competitive advantage lies in its massive enterprise software franchise and data ecosystem. Thousands of large corporations already run Oracle’s databases and applications, making Oracle a strategic partner. This entrenched customer base creates high switching costs, as companies are hesitant to rip out multi-year systems once in place. Moreover, Oracle is now leveraging that data footprint for AI. As Oracle’s founder Larry Ellison boasts: “Our database takes all of your data… This is why our database business is going to grow dramatically.” In other words, Oracle’s platform can seamlessly integrate customers’ proprietary data with cutting-edge AI models in the cloud.
Source: Company Filings
Oracle also differentiates itself with a multi-cloud, hardware-inclusive approach. It supports running its applications on other public clouds (AWS, Azure, Google) as well as its own Oracle Cloud Infrastructure (OCI) data centers. Oracle now has 23 multi-cloud datacenters live and 47 more in progress, enabling companies to use Oracle’s software whether they buy Oracle’s cloud or not. This neutral stance can win business from customers who want cloud flexibility.
Oracle has also embraced partnerships (with OpenAI for AI compute, Meta for Llama training, Microsoft for cross-cloud connectivity) to extend its reach and credibility in AI and cloud. Its vertical integration through bundling database, apps, and now AI gives it a unique moat.
Key advantages:
Data & Apps Moat: A huge enterprise client base and broad software stack (database + ERP/HCM/CRM) make Oracle very sticky. Switching costs are high.
Integrated Cloud & AI: Oracle uniquely combines its database and business software with new AI/cloud services. Its GPU supercomputer and AI platform let customers run models directly on their Oracle-managed data.
Multi-Cloud Neutrality: Oracle supports its software on AWS, Azure, on-premises, or Oracle’s own cloud. This “cloud-agnostic” strategy widens its market beyond just OCI customers.
Source: Company Filings