On his second day in office, President Donald Trump shook up the tech world when he announced Stargate, a $500 billion investment into infrastructure for artificial intelligence (AI). Oracle (ORCL), SoftBank (SFTBY), and OpenAI have been called on to form the joint venture, and executives from each company have already met with Trump to discuss the work. Their goal is to invest at least $500 billion in AI infrastructure within the U.S. and create at least 100,000 jobs. Trump says this is part of a broader plan to “keep [AI] in this country,” referencing competition from China.
Oracle co-founder Larry Ellison said that work is already underway, with 10 buildings under construction in Texas. Ellison said this total will expand to 20, and Stargate will also pursue multiple locations within Texas.
Oracle stock shot up more than 7% on Tuesday to close above $170. As a new administration takes over the White House and puts Oracle front and center, is ORCL the best stock to buy for the next 4 years?
About Oracle Stock
Since its public debut in 1986, Oracle has assumed an almost legendary reputation in the tech world. The company claims that its technology has helped “build entire industries,” and its accomplishments span creating the first autonomous database and having the largest suite of AI-powered cloud applications. Oracle says it has spent more than $80 billion on research and development since 2012 to fund this innovation.
However, Oracle stock traded largely sideways from 2021 to 2023. Things started to turn at the end of 2023, and over the past 52 weeks, the stock is up nearly 73%. Shares are up 14% so far in the year to date, and over 20% in just the last five trading days.
Oracle is currently valued above $480 billion by market capitalization.
Fiscal Q2 Results Miss Expectations
Oracle stock fell nearly 7% on Dec. 10 after the company reported second quarter results for its fiscal 2025 that missed estimates. Its revenue grew 9% year-over-year to $14.1 billion, but slightly missed consensus estimates. Adjusted earnings per share climbed 10% to $1.47 but also missed estimates.
Key drivers of its revenue growth were its cloud and cloud infrastructure segments, which reported revenue growth of 24% and 52%, respectively. CEO Safra Catz said that the Q2 results came from “record level AI demand” that drove growth at a much higher rate than “any of our hyperscale cloud infrastructure competitors.” Oracle is guiding for total revenue above $25 billion in fiscal 2025.
However, its guidance also came in below analyst estimates. The company is guiding for revenue growth between 7% and 9% for the current third quarter, which would come in at $14.3 billion at the midpoint. Analysts were looking for revenue of $14.65 billion.
Reflecting on the post-earnings drop, Wall Street seems to have concluded that expectations for Oracle flew too high, too fast, as it continues to harness increasing demand for AI solutions.
Is ORCL Stock a Buy Now?
So how should investors square its guidance for 2025 with a huge catalyst in the form of presidential support? Right now, Oracle has a consensus “Moderate Buy” rating with an average price target of $194.68. This is just 5.5% above its current trading price, although its Street-high price target of $220 represents nearly 20% upside potential. Of 33 analysts covering the stock, 21 have individual “Strong Buy” ratings, reflecting a good deal of confidence.
In response to the Stargate news, Mizuho analyst Siti Panigrahi wrote that this was a “significant opportunity” for Oracle. Others on Wall Street likely feel the same way, and re-ratings of its shares could be just around the corner.
