Key Points
Oracle differentiates from its competition by offering customers a unique and flexible cloud infrastructure service.
Per recent filings, the company just signed a new cloud deal for $30 billion in annual revenue.
While Oracle stock appears pricey, I think that momentum in the cloud business coupled with visibility into future growth is deserving of a premium.
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Since artificial intelligence (AI) emerged as the stock market’s next major trend a couple of years ago, a small concentration of mega cap technology companies have become favorites within investment circles.
The collective, known as the “Magnificent Seven”, includes cloud hyperscalers Microsoft, Alphabet, and Amazon, consumer electronics maker Apple, electric vehicle (EV) pioneer Tesla, social media behemoth Meta Platforms, and chip designer Nvidia. While many of these stocks have produced market-beating returns over the last couple of years, a new force is emerging in the AI realm.
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As of closing bell on July 3, shares of Oracle (NYSE: ORCL) have gained 42% in 2025. This handily outperforms any of the Magnificent Seven, as well as the broader indices such as the S&P 500 or Nasdaq Composite.
Let’s dig into the catalysts pushing Oracle stock higher. In addition, I’ll detail a new deal the company signed and explain why it represents a transformative shift for the database management provider.
Image Source: Getty Images.
Oracle announces a $30 billion cloud deal
As investors know, businesses across the world have been spending billions over the last couple of years buying chipsets and building data centers as part of their AI roadmap. Oracle isn’t an exception to these patterns. What is unique, however, is Oracle’s approach to monetizing these assets.
Oracle offers its customers infrastructure-as-a-service (IaaS). What that means is businesses that want access to GPUs and AI-equipped data centers can do so through the Oracle Cloud Infrastructure (OCI). This is advantageous for customers, as it essentially allows them to rent the AI products they need as opposed to building time-consuming and expensive data centers themselves.
Per a recent 8-K filing, Oracle just signed a cloud deal that is “expected to contribute more than $30 billion in annual revenue” starting in fiscal year 2028.
Who is Oracle’s new cloud infrastructure customer?
The 8-K filing did not reveal who Oracle’s new cloud infrastructure deal is with. However, based on some breadcrumbs, I’ve narrowed it down to two potential candidates.
Shortly after President Donald Trump was inaugurated, Oracle founder Larry Ellison joined OpenAI CEO Sam Altman at the White House to announce a joint venture known as Project Stargate. The goal of Stargate is to invest $500 billion into AI infrastructure projects over the next several years.
Considering OpenAI’s recent strategic partnership with Alphabet’s Google Cloud Platform (GCP), I would not be surprised if the ChatGPT developer is looking to complement this new deal with Oracle’s infrastructure services as part of the Stargate vision.
Another potential candidate could be G42, which is a holding company that focuses on various AI services based in Abu Dhabi. Over the last couple of months, several American AI developers including Nvidia, Advanced Micro Devices, and Cisco have signed Sovereign AI deals — particularly with countries across the Middle East.
Given Oracle already works with G42 through a partnership with Cleveland Clinic, it’s possible the two AI companies deepened their partnership through this new cloud deal.
Is Oracle stock a buy right now?
From a macro perspective, AI infrastructure spending could eclipse trillions of dollars by next decade — according to management consulting firm McKinsey & Company. While Oracle’s cloud infrastructure services appear to be benefiting from these secular trends, so is the company’s stock price.
Per the graph below, Oracle’s forward price-to-earnings (P/E) multiple of 35 is among the highest across leading cloud infrastructure players. In addition to its premium multiple, the recent ascent in Oracle’s valuation relative to its peers is hard to deny.
ORCL PE Ratio (Forward) data by YCharts
In my view, these trends could suggest that some of the upside from Oracle’s infrastructure business and its new deal are already priced into the stock.
Nevertheless, my conviction remains high regarding Oracle’s long-term growth prospects. I am encouraged by the company’s ability to win new deals for its OCI operation, especially ones that provide investors with visibility into growth years down the road.
For these reasons, I still see Oracle stock as a compelling opportunity beyond the usual Magnificent Seven suspects and think now is a great time to scoop up some shares.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, 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. Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Cisco Systems, Meta Platforms, Microsoft, Nvidia, Oracle, and Tesla. 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.
