NEW YORK (Realist English). Oracle shares soared 36% this week — their biggest single-day gain since 1992 — after the software giant reported quarterly earnings boosted by enormous cloud contracts, including a landmark deal with OpenAI. But the rally quickly cooled as investors voiced concerns over Oracle’s heavy dependence on the cash-burning AI startup.
According to Oracle’s filing, performance obligations surged 359% year-on-year to $455 billion, largely reflecting OpenAI’s multiyear commitment. CNBC confirmed that the Microsoft-backed AI company has agreed to spend about $300 billion on Oracle’s computing infrastructure over five years beginning in 2027. Earlier disclosures pointed to a $30 billion contract starting in two years.
Analyst Gil Luria of D.A. Davidson, who recommends holding Oracle shares, warned that if more than 90% of Oracle’s backlog is tied to OpenAI, “enthusiasm is significantly reduced.” After the stock’s historic jump on Wednesday, Oracle fell 6% on Thursday and another 5% Friday.
OpenAI’s outsized influence has already reshaped the broader market. Since ChatGPT’s release in late 2022, Oracle, Broadcom, Microsoft and Nvidia have collectively added over $4.5 trillion in market value, fueling record highs for the Nasdaq and S&P 500. OpenAI itself is valued at about $500 billion, despite ongoing losses and rising competition from Meta, Google, and startups such as Anthropic.
OpenAI chief Sam Altman has committed billions across the sector, including contracts with CoreWeave and Google, and a $19 billion pledge toward Stargate — a joint AI infrastructure venture with Oracle and SoftBank announced by President Donald Trump in January. Luria described Altman’s approach as “signing very large checks without needing to worry about whether those can ever be cashed.”
Meanwhile, OpenAI is accelerating its transition to a for-profit structure. The nonprofit parent will retain a stake worth over $100 billion as the company becomes a public benefit corporation, a restructuring needed to unlock a $40 billion financing round. OpenAI projects revenue growth from $10 billion annually in 2024 to $125 billion by 2029.
For Oracle, OpenAI’s commitments pushed its market capitalization to $930 billion midweek before sliding back to about $830 billion. Yet doubts remain about its place in the AI race. Byron Deeter, partner at Bessemer Venture Partners, called Oracle a “B-level hyperscaler” still trailing Amazon, Microsoft and Google. “Two days ago, we all thought Oracle was nowhere in AI,” he said. “They announce this mega-deal, people think they’re the next great hyperscaler — and I don’t buy that.”
