The household names of the early 2000s have been catching the spotlight in recent months as companies like Dell and HP regain momentum on their successful AI pivot. However not all names who pivoted to the AI buildout gained the same attention…Oracle being a prime example. Although Oracle is becoming a major player in AI infrastructure, investors have turned their backs on it because of the growing debt it’s taken to fund its ambitious projects.
The concern is understandable. Oracle is no longer being viewed as a slow legacy software company with a predictable cloud business. It is now being viewed as an aggressive AI infrastructure company that is spending heavily to secure its place in the next phase of computing. That shift comes with opportunity, but it also comes with risk.
The company is trying to position itself as a major backend provider for AI workloads, offering the compute, storage, databases, and cloud infrastructure needed to train and run large models. If successful, Oracle will become one of the “landlords” of the AI economy (through data). The problem is that becoming a landlord in this industry is extremely expensive. Data centers require enormous upfront capital, long construction timelines, expensive chips, power contracts, networking equipment, and debt financing.
Will the Bet Payoff?
That’s the real question on investor’s minds, and likely to remain one until “Stargate,” the joint AI infrastructure project between Oracle, OpenAI, SoftBank, and other major partners, starts showing real financial results.
On paper, Stargate is exactly the type of project that could transform Oracle’s future. It gives the company exposure to one of the largest technology buildouts in modern history, placing it directly in the middle of the AI infrastructure boom. If artificial intelligence is the next major computing platform, then the companies supplying the cloud capacity behind it could become some of the biggest winners.
The risk, however, is timing and execution. Oracle is spending aggressively today for revenue that may take years to fully materialize. That means investors are being asked to trust that the demand will be there, the customers will keep spending, and the returns will eventually outweigh the cost of debt. In a lower rate environment, that might be easier for the market to accept. But with interest rates still elevated and investors more focused on cash flow discipline, Oracle does not get the benefit of the doubt as easily.
Hyper Stocks Summary:
At $589.6 billion in market cap, Oracle is one of the cheapest “major” AI infrastructure players on the market (by market cap), but it still trades at a premium. Forward P/E is 23% above sector and price to sales is higher than peers…meaning they still need to perform in tip-top shape in order to keep investors happy (especially with the chart already struggling). On the bull side, the company holds one of the largest backlogs in tech history at $553 billion, which is the most compelling side of the story, but that depends on execution and timing (as mentioned above). It seems like they’re taking a bold bet, making them a bold bet, but the timeline is hard to place…this might be one to DCA into, add to slowly as more data is released.
Option Chain Analysis
ORCL’s option chain expiring on July 17, 2026 currently reflects an implied volatility reading of 77.4%, which calculates to roughly a $42 expected move from the underlying stock through expiration. That does not tell us direction, it only tells us the size of the move the options market is pricing in. Whether that move becomes bullish or bearish will depend on Oracle’s earnings results, guidance, AI/cloud commentary, and how investors react to the company’s backlog and Stargate-related demand.
ORCL’s current implied volatility is only slightly above its recent 20 day average. If 1.00 represents the average/neutral level of option pricing, ORCL is currently sitting around 1.07, meaning options are somewhat elevated, but not extremely stretched relative to where they have been recently. The market is still pricing in a meaningful move, but options are not unusually expensive compared to ORCL’s recent volatility range (if Oracle does move big, this sets up options for nice premium expansion).
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