The production of artificial intelligence The (AI) trend has tipped many millionaires over the past few years. And so far, most of the best returns for investors have come from the infrastructure side of the opportunity, which focuses on supplying the computing power and hardware that AI software companies need to build and run their large language models (LLMs).
Oracle(NYSE: ORCL) It operates at the center of this ecosystem. But while its shares nearly quadrupled between late 2022 and September 2025, when they hit an all-time high of $326.90, they began what turned out to be a steep slide as investors became more concerned about the company’s long-term strategy. Now, they are more than 50% away from that peak. Can Oracle still be a millionaire-making stock, or should investors consider jumping ship?
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Despite only emerging as a major industry in the last few years, the economics of AI are already very complex. On the one hand, you have companies like Nvidia and Advanced Micro Deviceswhich creates Graphics processing units (GPUs) and AI accelerators that power LLMs. On the other hand, you have software players like OpenAI and Anthropic, which use this computing power to train and run their algorithms.
Oracle acts as an intermediary in this ecosystem. It buys AI hardware to build data centers, then rents computing power through its cloud platform. This business model allows the company to take advantage of a huge growth opportunity without directly competing in the fast-growing market for consumer and enterprise AI software. That said, it is not without risks.
For starters, building data centers is expensive — really expensive. Oracle borrowed heavily to finance the construction of this infrastructure. This amount, and associated interest charges, must be repaid. At the same time, the hardware that consumed it the most will age and become obsolete (recorded as Depreciation expense), potentially causing a long-term drag on the company’s earnings and cash flow.
Uncertainty about Oracle’s business model came to a head in December, when the company unveiled a $300 billion deal to supply computing power to ChatGPT developer OpenAI over the next few years. While such a large purchase commitment would generally be good news, investors know that Oracle will need to spend more on infrastructure to meet OpenAI’s needs.
Bloomberg reported that Oracle would need to build five of the largest data center complexes in the world, filled with millions of expensive AI chips, and each consuming enough electricity to power a city. Management believes it can complete the job in 2027, but its balance sheet could pay the price.
Last year, Oracle had Capital expenditure Of the 21 billion dollars. This number is set to double this year to $50 billion. And this month, the company announced plans to raise an additional $45 to $50 billion through the sale of debt and equity financing (creating and selling new units of stock). This strategy will dilute existing investors by reducing their claims on the company’s future profits.
In a typical “gold rush” situation, companies that tend to sell the equivalent of “shovels and shovels” are safer bets than companies that try to strike gold. But Oracle’s big spending plans and reliance on debt financing make it a risky path for investors to try to bet on the AI boom. The company is also heavily reliant on purchase commitments from OpenAI — a company dealing with cash burn and falling market share.
Some of these challenges are already priced into Oracle stock. With a forward price-to-earnings ratio of just 18, it trades at a discount S&P 500of the An average P/E of 22. That said, investors who shop around for good deals may find better options.
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Will Ibefing has no position in any of the listed stocks. Motley Fool is based on and recommended by Advanced Micro Devices, Nvidia, and Oracle. Motley Fool has a disclosure policy.
Could Oracle be a millionaire-making stock? Originally published by Motley Fool
