AI Is Surging to Even Greater Heights. Oracle Is Just 1 Sign.

Sep 10, 2025 16:45:00 -0400 by Tae Kim | #AI #Barron's Tech

The AI trade is flying again on bullish news from Oracle, CoreWeave, and Microsoft. (Dreamstime)

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Inference Liftoff. This year’s market reminds me of the movie Groundhog Day. In this version, sentiment about the artificial intelligence investing theme ebbs and flows every few weeks. In the end we land in the same place: AI is the real deal.

On Wednesday, the AI trade was flying again after three important developments suggest demand is picking up and is as strong as ever.
It started late Monday when AI cloud computing company Nebius announced an AI computing infrastructure deal with Microsoft through 2031. It’s worth between $17.4 billion to $19.4 billion. The takeaway is that Microsoft is still seeing more demand for AI than they have the capacity to serve. Nebius shares rallied 49% on the news.

On Tuesday, Nebius rival CoreWeave emphasized that demand for its AI computing infrastructure had risen again. “What we observed in the past four to six weeks is yet another inflection in demand,” CoreWeave executive Brannin McBee said at a Goldman Sachs conference on Tuesday, adding that demand for inference, the process of generating answers from AI models, had accelerated.

And then came Oracle . The stock surged 36% on Wednesday after the company said its order backlog had soared to $455 billion, up $317 billion from the prior quarter. It cited new large contracts from OpenAI, xAI, and Meta Platforms. CEO Safra Catz said that Oracle expects to sign more multibillion-dollar deals in the current quarter, which would push the backlog to over half a trillion dollars. The number was so stunning that many on Wall Street thought it was a typo.

While skeptics wring their hands about the sheer size of the numbers and think back to the dot-com bust, I think the developments this week will prove to be durable as the industry pivots to monetization.

A half-trillion dollars over several years is a large number, but it’s still just a small slice of the total IT market. According to Gartner, worldwide IT spending is expected to total $5.4 trillion this year.

Like CoreWeave, Oracle co-founder Larry Ellison emphasized on Oracle’s earnings call that much of the demand was for inference capacity. This is an important point. Inference enables companies to generate revenue and monetize their investment in AI training. Ellison said AI inferencing would be a larger market than AI training and would be used for automated robotic factories, autonomous driving, drug design, and legal and sales processes.

“AI is fundamentally transforming Oracle and the rest of the computer industry,” the Oracle co-founder said. “Not everyone fully grasps the extent of the tsunami that is approaching.”

This isn’t a one-quarter phenomenon but rather a once-in-a-generation paradigm shift in computing, akin to the move from mainframes to PCs in the 1980s. Companies across the world have no choice but to upgrade their infrastructure and re-architect their systems from a legacy model that used CPUs to retrieve static files to an AI-based GPU computing system that distills knowledge across internal databases to generate better insights and analysis. The latest numbers signal corporations are beginning to use AI to make knowledge and insights instantly accessible to their staff.

Barron’s has repeatedly been bullish on Oracle’s shares. I recommended Oracle last November on the thesis that the firm had the most upside among AI infrastructure stocks because it was becoming the third-party cloud provider of choice for AI and it had a strong partnership with Nvidia . Since then, the shares are up nearly 80%. This is a multiyear growth trend, and Oracle is likely to continue to take share.

The important thing for investors is to carefully assess each new development under the right context, calmly separate fact from fiction, and ignore short-term volatility if the fundamentals haven’t changed. I will stay on top of those goals.

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Write to Tae Kim at tae.kim@barrons.com or follow him on X at @firstadopter.