Date: September 12, 2025
Oracle Corporation has sent shockwaves through the markets with a stunning share-price surge, raising fundamental questions among investors and analysts: Is this a genuine boom powered by the AI revolution — or are we seeing early warning signs of another tech bubble?
What Happened
- Oracle’s stock jumped roughly 36–43% in a single trading day, its largest one-day gain since 1992. (Business Insider)
- The trigger: an explosive increase in demand for AI infrastructure, four large multibillion-dollar cloud contracts, including a major $300 billion deal with OpenAI over five years. (The Verge)
- Oracle also reported a backlog of $455 billion in remaining performance obligations (RPO) — i.e. contracted but not yet recognised revenue — up ~359% year-over-year. (Investopedia)
- Its cloud infrastructure revenue is projected to grow strongly: 77% growth for the current fiscal year, with further ambitious forecasts extending into 2030. (markets.businessinsider.com)
The “Boom” Case
Those who believe this surge is more than hype point to several supportive facts:
- Strong Fundamentals in Cloud & AI
Oracle isn’t simply riding speculative hype — there are actual contracts in place, large customers investing, and demand for infrastructure rising sharply. (Yahoo Finance) - Clear Revenue Visibility
The massive backlog (RPO) gives Oracle a long runway of future revenue, giving investors confidence that growth is not just theoretical. (Investopedia) - Favourable Industry Tailwinds
AI is increasingly at the centre of technology spending. Organisations are competing for computing power, data center capacity, and cloud infrastructure. Oracle seems well-positioned in this race. (The Economic Times) - Upgraded Analyst Expectations
Several major brokerage/analyst firms have raised their price and revenue targets for Oracle. Some believe the stock still has room to run. (Investopedia)
The “Bubble” Concerns
On the flip side, there are real risks and signs that the rally might be overshooting what fundamentals can sustain:
- Valuations Are Very Elevated
Oracle is now trading at forward P/E multiples far above many of its cloud peers. It has reached levels reminiscent of past bubbles — meaning investors are paying a high price for future expectations. (Reuters) - Dependency on Big Contracts & Few Customers
A large portion of the excitement is driven by a few very large deals (e.g., OpenAI). If any of these fall through, get delayed, or fail to deliver, the ripple effects could be large. (Fast Company) - Margin and Cash Flow Pressure
Building AI infrastructure (servers, data centres, power, cooling, GPU chips) is expensive. Profit margins in cloud infrastructure are under pressure, especially with rising capex. If Oracle’s investments don’t pay off quickly enough, expectations could outpace reality. (sharecafe.com.au) - Market Sentiment & “Irrational Exuberance”
Observers are warning that what’s happening with Oracle could be an accelerating example of broader “AI euphoria” — like the dot-com bubble — where price gains are driven more by belief in a breakthrough narrative than consistent, proven earnings growth. (Reuters)
- Sustained Growth Scenario: If Oracle delivers on its contracts, meets or exceeds the ramp in cloud revenue, manages its costs and infrastructure scaling well, its valuation may be justified — and possibly undervalued in light of what AI promises.
- Correction Scenario: If growth slows, if margin pressure mounts, or if macroeconomic / regulatory headwinds interfere, Oracle shares could see a sharp pullback. In that case, the recent surge may look more like the peak of a speculative wave.
- Hybrid Outcome: Perhaps most likely — we get continued strong performance, but with volatility. Some of the most aggressive forecasts might be pared back; valuation multiples might compress even if net revenues grow.
Verdict: Boom with Caveats
Putting all this together, the recent Oracle surge looks more like a boom driven by real developments in AI and cloud infrastructure than a pure speculative bubble — but with important caveats. The risk isn’t that the entire story is false; it’s more that some of the expectations baked in may be over-optimistic. Investors are betting heavily not just on what Oracle has done, but on what it will deliver, and on how large and profitable the AI infrastructure market becomes.
So for those considering whether to invest now: it’s a high-reward but high-risk moment. Being selective and vigilant about whether growth metrics (revenue, margins, execution) keep up with price expectations will be critical.