For much of the 2010s, Oracle(NYSE: ORCL) stock went nowhere as the legacy tech giant struggled to deliver growth and fell behind the faster growing tech stocks now known as the "Magnificent Seven."
However, the company has been reborn in the artificial intelligence (AI) era, and the stock jumped as demand for its cloud-infrastructure services has soared, and it's rapidly adding new data centers.
Now, Oracle has gotten another jolt with the announcement of the Stargate AI infrastructure project. Softbank, OpenAI, Oracle, and MGX, a new Emirati investment firm focused on AI technologies, are creating the company and pledged to invest at least $100 billion and up to $500 billion in new AI infrastructure to support American leadership in the new technology. Oracle stock finished up nearly 7$ on news of the announcement.
Image source: Getty Images.
What is the Stargate Project?
According to an OpenAI's post announcing the project, Stargate will build new AI infrastructure for OpenAI in the U.S. OpenAI announced that Stargate's equity partners will be Softbank, OpenAI, Oracle, and MGX, and the key technology partners will be Arm, Microsoft, Nvidia, Oracle, and OpenAI. The equity partners will provide capital while the tech partners will supply the chips and other tech infrastructure. Softbank and OpenAI were named as the lead partners for the project with Softbank having financial responsibility for itand OpenAI in charge of operations.
The goal of the project is to ensure American leadership in AI, aid national security, and contribute to the manufacturing revitalization in the country.
What it means for Oracle
While OpenAI and Softbank are the leaders of Stargate, Oracle looks set to cash in on the deal as the only cloud-infrastructure company named as the initial equity funders.
While Microsoft is one of the tech partners, Oracle is the clear leader here among the cloud infrastructure partners, and its cloud infrastructure is often favored by the government and other high-value customers due to its reputation for security, reliability, and scalability.
It also serves as a high-profile win for a company that is facing a lot of competition in the AI data center with other big tech companies, though it's formed a strategic partnership with Microsoft as both companies are opening data centers as fast as they can, according to Oracle CEO Larry Ellison.
Finally, $100 billion represents a huge investment in data centers, and Oracle should benefit as OpenAI monetizes the investment.
The OpenAI/Oracle relationship
OpenAI worked closely with Microsoft for much of its history and has received an estimated $13 billion in funding from the tech giant.
However, more recently it forged a partnership with Oracle. In June, OpenAI selected Oracle Cloud Infrastructure (OCI) to extend the Microsoft Azure AI platform to OCI, giving extra capacity to OpenAI. The move seems designed to increase OpenAI's ability to train its large language models (LLMs).
Oracle also worked closely with Microsoft since the AI race started, so the partnership with OpenAI makes sense. Microsoft isn't being elbowed aside here as it will be one of the tech partners involved, but running data centers for a project set to receive at least $100 billion in funding should be lucrative for Oracle.
Is Oracle a buy?
Oracle isn't one of the "Magnificent Seven" stocks, but it outperformed its peers in that group as of late, and the company is also outgrowing the "big three" cloud-infrastructure platforms, Amazon, Microsoft, and Alphabet in cloud-infrastructure revenue.
Revenue in its most recent quarter from cloud infrastructure jumped 52% to $2.4 billion. Overall revenue growth at Oracle, which may be best known for its database software, was more modest at 9% as businesses like licensing, hardware, and services are either flat or declining.
However, its growth should accelerate as cloud computing makes up a larger percentage of its business. It's unclear exactly what the reward to Oracle will be for Stargate, but it could be significant. Meanwhile, the company also seems likely to benefit from Ellison's cozy relationship with President Donald Trump.
Overall, 2025 looks set to be another strong year for Oracle stock.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Amazon, Arm Holdings, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
