We recently published 10 Trend Stocks to Watch as Brad Gerstner Explains Tailwinds for AI Trading: ’10x Manhattan Project’. Oracle Corp (NYSE:ORCL) is one of the trending stocks to watch.
Joseph Terranova, senior managing director at Virtus Investment Partners, recently commented on Oracle Corp (NYSE:ORCL) following the stock’s decline in a media report that said the company’s margins related to its Nvidia Cloud business are low. The analyst said Oracle Corp (NYSE:ORCL) stock’s gains following its AI deals showed “euphoria” and that the company may not be in a strong position to invest heavily like Amazon or Alphabet.
“I think that’s the euphoria. I think it’s represented on September 10. You know, Josh is talking about a bubble. Sir John Templeton talks about the stages of a bull market. The last stage is euphoria. And in certain areas of the market, there will be euphoria. I think Oracle Corp (NYSE:ORCL) is a classic example of that. From September 9 to 10, a parabolic move of over 40% to rise And then the dramatic steady decline since then. Why? Because spending here is done through debt. That is not what should encourage the market. What had encouraged the market previously in the early stages of 2025 and into 2024 is that free cash flow was the catalyst behind much of the spending. You don’t want this to become a debt-driven cash expense on CapEx. This is worrying for the market and I think it is clearly represented here. I understand why Oracle Corp (NYSE:ORCL) did what it did by signing the deal. They need to suffer in the short term with their profit margins to obtain long-term profitability. But in reality, they may not be in the best position, like Google or Amazon, to accept that kind of financial dynamic.”
Why are some analysts reluctant about the Oracle-OpenAI deal? OpenAI is expected to spend about $115 billion over the next four years and is not expected to become profitable until 2030. Even after the latest $100 billion investment from Nvidia, OpenAI will likely need to raise more than $200 billion in total funding to cover its commitments. Some analysts believe Oracle may need to borrow tens of billions to build enough data centers for the deal.
ClearBridge Large Cap Growth Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its Letter to investors for the third quarter of 2025:
“During the quarter, the Strategy initiated new positions in infrastructure software providers. Oracle Corporation (NYSE:ORCL) and Datadog and added custom silicon developer Broadcom. Oracle, a leading provider of database software for large enterprises, has successfully expanded into cloud infrastructure as a platform for running generative AI workloads. Oracle is gaining share among hyperscalers due to its lower-cost data center architecture, which is well suited for large-scale AI training workloads. We believe that Oracle’s market share will continue to grow in the coming years and the profitability of this growth will be underestimated by the market.
