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Oracle (ORCL) shares fell 28% in the past month as AI infrastructure fears triggered a 40% peak-to-trough correction.
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Oracle holds a colossal cloud contract with OpenAI and stands to benefit directly from OpenAI’s growth.
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Deutsche Bank highlights Oracle’s very real opportunity while acknowledging financial and operational risks from heavy debt.
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It’s been yet another awful month for shares of the once-hyped AI infrastructure firm Oracle (NYSE:ORCL), which are down 28% in the past month after a peak-to-trough correction of 40%. With much of the latest AI dip arising from fears of what could go wrong if the heavier AI spenders don’t get the return they’re hoping for, it’s not a mystery to see Oracle stock leading the charge lower. A historic implosion followed a historic single-day surge. But such a quick correction shouldn’t come as a surprise, especially when you consider that volatility can hit both ways.
Though the future is cloudy for the aggressive AI infrastructure firm, I think it’s unfair to ditch the stock just because it’s leveraging up to seize a potential generational opportunity. If the AI boom really does lead to some form of superintelligence that sparks the rise of a digital labor force, and with that, a mass displacement of white-collar workers, the smartest move may very well be to be as aggressive as possible.
Of course, we’ll never really know if “flooring it” is the best possible move for Oracle until a few years down the road. If monetization never lives up to expectations, it could be quite the doozy for the firm as the weight of its debt becomes heavier. Just how likely is the bear case, though? It’s tough to say. I’d argue that a bull case might be likelier, especially if you’re in the belief that OpenAI is the horse to bet on in the AI model race.
Sure, overexposure to any single client may be a perceived negative by investors, but what if that one client ends up as the winning horse that passes the AGI (artificial general intelligence) finish line?
Though OpenAI has lost some of its luster in the past week, thanks in part to the impressive launch of the latest and greatest Google Gemini 3.0, one has to think that Sam Altman and company are hard at work readying to respond with a new model that’s just as big. With the GPT-5 fumble, I do think that OpenAI will take its time to ensure its next big launch is a hit.