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Oracle is increasingly viewed as a practical test of whether the current wave of AI investment is sustainable or closer to a bubble. Rather than focusing on OpenAI or Anthropic, the article argues that Oracle—an older database and software company—offers a clearer gauge because it has committed heavily to an AI infrastructure future while its traditional business faces gradual decline.
The company has directed most of its capital toward AI, but with a strategy that differs from many peers. Oracle is not primarily described as building large language models or simply selling cloud services. Instead, it is positioned as a Software-as-a-Service (SaaS) provider betting its future on a specific AI infrastructure and deployment path, even as its core database business is portrayed as fading over time.
Oracle founder Larry Ellison, known for making bold technology promises, has a history of pushing ideas that later proved difficult. The article recalls that in 1996 he promoted a “computer of life,” a concept seen as a precursor to cloud computing, but the product failed. It also notes that in 2011 Ellison publicly mocked cloud computing, a stance that the article says helped Amazon and Microsoft gain ground.
By February 2025, Ellison told former UK Prime Minister Tony Blair that “AI is something far greater than the Industrial Revolution, electricity, and everything before it combined.” The article frames this as part of Oracle’s effort to avoid repeating earlier missteps and to reposition the company around AI infrastructure.
The article describes Oracle’s AI build as closely linked to OpenAI. It says the deal is costly: Oracle borrowed up to $43 billion in fiscal 2026, with $39 billion in capital expenditure, pushing free cash flow into negative territory.
It also cites Oracle’s remaining $553 billion in contractual obligations, stating that more than $300 billion are associated with OpenAI. The article adds that Oracle does not build its own data centers, instead outsourcing construction to firms such as Crusoe under long-term 15-year contracts that carry substantial risk.
According to the article, this structure reduces Oracle’s autonomy. It quotes Sam Altman as saying: “I expect the external climate will be uncomfortable for a while.” It also claims that the Stargate project was effectively shelved as executives shifted attention to Meta.
The article states that OpenAI is projected to spend up to $665 billion by 2030, even after raising $122 billion. It also says Oracle CFO Sarah Friar warned internally about the ability to pay computing contracts if revenue growth does not accelerate quickly enough.
For valuation context, the article compares multiples: it says OpenAI is valued at about 28 times 2026 revenue, while Nvidia—described as the more profitable company—trades at roughly 12 times. The implication presented is that Oracle is staking on a partner with a fragile financial footing.
The article lists multiple constraints on Oracle’s AI infrastructure expansion. It says 11 U.S. states are considering temporary bans on data centers amid community opposition focused on energy use.
It also cites Project Jupiter in New Mexico facing accusations that its greenhouse gas emissions exceed those of the two cities combined. In Wisconsin, the article says protests have followed round-the-clock construction, with demands that the project be withdrawn.
Geopolitical and supply-chain factors are also described as adding pressure. The article notes that blockades of the Hormuz Strait threaten helium supply, a critical input for chips. It also says aluminum prices have surged, raising server rack and cooling costs.
The bond market is described as reacting with unease. The article quotes John Lloyd of Janus Henderson Investors saying: “Oracle’s CDS has become a barometer for AI risk.” It adds that risk may increase as OpenAI deploys resources, while Anthropic—via Claude Code—is gaining traction in enterprise settings.
The article describes Ellison’s belief in “inferencing” on private data. It says Oracle holds sensitive data including information from the U.S. Air Force and medical records, and it has a $2 billion stake in U.S. TikTok while serving as ByteDance’s main storage partner.
However, it also notes that Oracle’s data reputation is not spotless. In 2024, the company settled a class-action suit alleging it collected data unlawfully to assemble digital profiles of users and sell them to advertisers.
The article further describes Ellison’s vision of unifying national data into a single database, including the idea that AI could enable continuous government surveillance. It also says Oracle’s core business advantage is customer “lock-in,” arguing that once data is within Oracle’s ecosystem, moving it out becomes difficult, increasing reliance on Oracle’s inference services.
The article characterizes Oracle as being in an aggressive execution phase, racing to convert projected AI demand into real data centers before funding runs out or the OpenAI alliance collapses under financial strain. It concludes that Oracle’s stock is no longer treated like a typical software investment, but rather as a high-risk derivative bet on whether the AI infrastructure and surveillance-era thesis plays out.
Source: The Verge
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