Oracle had its best day in 30 years thanks to AI investments

Markets and analysts were stunned yesterday to see enterprise software and cloud computing company Oracle’s stock shoot up to an all-time high of ~43%, marking its best day since 1992.

The rally added $244 billion to its market cap, pushing Oracle’s valuation to $922 billion. It also added over $100 billion to founder Larry Ellison’s wealth that led him to overtake friend Elon Musk as the world’s richest person.

Oracle’s stock soared after it disclosed expecting $455 billion in future contract revenue, a 359% jump from 2024 and far above the $180 billion analysts expected. It excels in providing AI cloud infrastructure and has benefited a lot from artificial intelligence-related investments.

Its clients include xAI, Meta, and ChatGPT maker OpenAI, which has reportedly struck a $300 billion deal with Oracle to buy computing power over five years starting in 2027.

However, the deal is risky for both sides. OpenAI currently generates about $10 billion in annual revenue, far below the $60 billion it will owe Oracle each year on average. CEO Sam Altman has informed investors that the company won’t turn a profit until 2029 and is expected to lose $44 billion.

Experts point out that Oracle is concentrating a huge chunk of future growth on one customer while carrying heavy debt, with a debt-to-equity ratio of 427% compared to Microsoft’s 33%.

Looking ahead, it forecasts $18 billion in cloud infrastructure revenue for fiscal 2026.