Oracle accelerates in the cloud race and aims to become the fourth global hyperscaler

Traditionally known for its dominance in enterprise databases, Oracle is solidifying its position among the elite in cloud computing. According to a recent report by Bernstein Research analyst Mark Moerdler, the American company is emerging as the fourth-largest cloud infrastructure provider worldwide, driven by growth in Oracle Cloud Infrastructure (OCI) and its strategic focus on artificial intelligence.

The analysis firm has raised its target price for Oracle’s stock from $269 to $308, representing a potential upside of 22% from current levels. Since the start of 2025, Oracle’s shares have increased by over 51.5%, reflecting market confidence in its transformation.

The pivotal moment was undeniably the multi-year agreement with OpenAI, which will position Oracle as a key infrastructure provider for next-generation language models. It’s estimated that this contract could generate more than $30 billion in cloud revenue starting in fiscal year 2028, significantly contributing to the revenue target of $104 billion set for 2029.

“Oracle is in the early stages of a massive cloud transformation. Growth should accelerate even further thanks to the rise of AI, creating a substantial investment opportunity,” Moerdler noted.

The shift toward a cloud-based business model presents certain financial challenges. Moerdler cautioned that gross margins could compress in the short term due to the heavy investments needed to scale OCI, attract customers, and compete against giants like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud.

However, Oracle remains confident in its ability to leverage operational leverage. Like Microsoft, the company has demonstrated an ability to improve profitability as its business volume grows.

“To understand how Oracle might partially offset these lower margins, one must look at its efficiency track record. It has been successful in generating sustained value for shareholders,” the analyst said.

Compared to other hyperscalers, Oracle’s estimated cloud revenue for 2025 is over $15 billion (growing rapidly), focusing on databases, applied AI, and performance-optimized workloads rather than trying to replicate the general-purpose infrastructure model of AWS or Azure.

Oracle is not aiming to copy AWS or Azure’s broad approach but instead competing in highly specific verticals where it can offer differentiating advantages, such as optimized services for data-intensive workloads, AI models, and mission-critical databases.

Furthermore, its partnership with NVIDIA to deploy advanced GPUs in its cloud infrastructure strengthens its offerings in generative AI training and inference.

Oracle is deploying sovereign cloud regions and dedicated zones to attract both the public sector and large regulated clients. In Europe, Latin America, and Asia, the company is gaining market share over traditional providers thanks to a more transparent offer, a predictable cost model, and compatibility with open standards.

Bernstein suggests that Oracle could double its enterprise cloud customer base within the next three years if it maintains its current pace, reinforcing its position as one of the “Big Four” in the sector.


Key Drivers of Oracle’s Cloud Growth:

  • Strategic OpenAI partnership to host advanced AI models
  • ✅ Growth focus on mission-critical workloads and regulated sectors
  • ✅ Alliances with NVIDIA and other key tech players for AI and performance
  • ✅ Global expansion with dedicated regions and sovereign zones
  • ✅ Rapid transition emphasizing efficiency and operational leverage

In Conclusion

Oracle is no longer just a database leader; it has become an expanding force in global cloud infrastructure, transforming into a strategic player within the new AI-centered tech ecosystem. In a market that rewards specialization and efficiency, its focused approach could turn out to be one of the most profitable surprises of this tech decade.

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