Oracle Has a Bright Future after Partnering with US Government
As Donald Trump took office this week, he announced a new AI infrastructure plan that would include input from Oracle, OpenAI, and Softbank, potentially helping all three companies.
Oracle (ORCL) is part of a larger AI infrastructure project that includes Softbank and OpenAI, initiated by the US government under Donald Trump. The project will require a total of $500 billion investment from the companies for the life of the project. Tesla CEO Elon Musk says that these companies cannot meet their investment requirement, however, noting that he knows Softbank only has $10 billion secured. The initial agreement states that three companies’ executives will have to donate $100 total between them during the initial stages.
Trump says he will use emergency powers to pull out money for the project, and he sees the AI infrastructure as very important for positioning the US as a strong competitor to China in this area. Trump stated that it is necessary for the US to keep this kind of project in its borders and to develop the infrastructure as a way to stand up to outside competitors.
Construction for the project is already underway, with 10 data centers having already been built in Texas for this purpose and more to be built in other states as time progresses.
What This Means for Oracle
The Oracle stock price has already responded to this fresh plan. Over the last two days, the stock price has skyrocketed by nearly 14%, and we expect that it will continue to climb and turn out to be a strong long-term investment.
The project, called Stargate, will take several years to complete, and during that time, the three companies will need to come up with $500 billion in investments. That will cut into Oracle’s earnings considerably, but the long-term implications are that Oracle’s employees will have job security all but guaranteed by the U S government as long as the project continues. It also means that Oracle will be at the cutting edge of AI development, which can secure it a place at the top of this growing market.
Oracle has a very profitable 2024, with the stock price shooting from $102 to $166. The recent news of its government partnership has helped bring Oracle stock up to $180.
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