Oracle has struck market-shaking deals with frontier AI model makers, but experts say it has also intensified its challenges to the Big Three in enterprise IaaS.
Whether enterprise AI will ultimately be a boon or a bubble, IT buyers have a new major player to consider in Oracle Cloud Infrastructure.
Oracle has made headlines this month, including a booming cloud revenue forecast on Sept. 9, driven largely by investments from frontier model companies such as the Stargate joint venture between OpenAI and Softbank, which inked a 4.5 gigawatt data center deal with Oracle in June. Oracle signed an additional $300 billion deal with OpenAI on Sept. 10 as the industry's AI infrastructure bonanza continued to gain speed. This week, the company added a CEO shakeup to the mix, as two of its AI initiative leaders — Clay Magouyrk, previously president of Oracle Cloud Infrastructure (OCI), and Mike Sicilia, formerly president of Oracle Industries — replaced Safra Catz as co-CEOs.
Oracle, like most of its cloud infrastructure competitors, is determined to capitalize on an industry-wide AI infrastructure gold rush. Gartner predicts that AI will account for $1.5 trillion in global spending in 2025 and $2 trillion in 2026, most of it coming from AI integrations into smartphones and PCs. There's some evidence that enterprises are also already paying more for software with AI features.
Thanks to this flood of new spending, "there are now four cloud hyperscalers," said Steven Dickens, CEO and principal analyst at HyperFrame Research, counting Oracle alongside the Big 3 cloud infrastructure providers AWS, Microsoft Azure and Google, thanks to its recent AI infrastructure deals. "It appears that the market has just realized that."
Enterprise AI infrastructure outlook still hazy
While some industry surveys connect enterprise AI budget forecasts to the overall AI spending trend, one analyst sounded a note of caution about whether that demand will ultimately materialize. An August report by MIT researchers indicated that 95% of enterprises are getting no return on AI investment.
Chirag Dekate
"Oracle's approach here has been to essentially go where the money is in building out some of the underlying infrastructure required for training and early inference scaling," said Chirag Dekate, an analyst at Gartner, in an interview with Informa TechTarget. "Enterprise adoption is relatively slow, so Oracle has been one of the fast movers in the space…trying to become the foundation for the kind of AI native experiences that will likely shape the rest of the decade, assuming continued progress in GenAI. And that's a huge assumption."
To Dickens, it's much too soon to predict how enterprise AI will play out, but it's clear that IT infrastructure is undergoing a generational change, spurred by AI growth.
"We're just over two years in [with generative AI] and we're only now starting to see that ripple through into the enterprise," he said. "We'll still be talking about infrastructure Capex at least five, if not more like seven and 10 years from now, before it tapers off."
Oracle OCI takes aim at cloud competition
For now, the promise of AI infrastructure growth has given Oracle and other enterprise IT vendors, including Intel, new opportunities to expand the scale of their businesses and an impetus to pour funding into R&D. These fresh investments are, in turn, causing big shifts in competitive dynamics that have otherwise been relatively stable for at least a decade.
"The last 18 months, everybody's had to just fundamentally re-architect what they're doing," including power and cooling in data centers amid a massive influx of resource-hungry GPUs, Dickens said. "If Michael Dell is taking up time in his [Dell Technologies World] keynote to talk about liquid cooling [in the new Dell AI Factory], that just kind of proves how crazy the world is right now."
Catering to enterprise AI early adopters has driven OCI's product development in the last 12 months. The company created AI on-ramps for its existing database customers and the data they already store in Oracle and MySQL starting in September with updates to its Oracle Fusion applications, and in December with Oracle Enterprise Manager (EM) 24ai.
"Oracle has done a really good job of making AI almost invisible in its Fusion Applications, and made them more sticky," said Rob Strechay, an analyst at TheCube Research. "But the strongest feature of OCI is that it's not a place, it's an operating model. That operating model might be located at AWS, which is Oracle's largest partner, where they'll put an Oracle EM 24ai database cluster on Oracle Exascale infrastructure.
The strongest feature of OCI is that it's not a place, it's an operating model.
Rob Strechay,Analyst, TheCube Research
This helps enterprise customers shore up data sovereignty for AI and data analytics infrastructure, regardless of which public cloud provider they use, Strechay said. Oracle has also been aggressive with its pricing for IaaS over the last year, claiming to undercut other providers by at least 50%, though the vendors' differing approaches to public pricing breakdowns make this difficult to verify.
However, "customers can also use things like Amazon Bedrock without having to worry about all the network [egress] charges," Strechay said.
Oracle inked similar partnerships in Sept 2024 with Google and Azure and rolled out private cloud support as well. Those cloud providers also offer distributed cloud services such as AWS Outposts, but those are still tied to a regional cloud-based control plane and services, whereas Oracle's Compute Cloud@Customer can be completely disconnected.
"Fujitsu, for example, runs an Oracle Cloud instance in Japan, for Japanese customers," Strechay said. "You can be an OCI cloud services provider without necessarily having your services tied [directly to Oracle] or to the U.S., for that matter. So they're partnering in a better way."
Oracle's reported $455 billion revenue backlog for cloud services could vault it into the upper echelon of public cloud competitors. But as of the second quarter of 2025, it still had a long way to go to catch up to the Big 3, according to a Synergy Research Group report, which ranked Oracle OCI fifth in market share with 3%, behind AWS at 30%, Azure at 20%, Google Cloud at 13% and Alibaba at 4%.
Still, as AI infrastructure shifts from a traditional CPU-based architecture to one driven by fierce competition for GPU hardware, Oracle's revenue backlog could further fuel its purchasing power against competitors. It's an area where it has already shown strength, with a reported $40 billion deal in May for Nvidia GPUs, Dickens said.
"[Oracle Chairman of the Board and CTO] Larry [Ellison] still has friends in all the right places," he said.
Beth Pariseau, a senior news writer for Informa TechTarget, is an award-winning veteran of IT journalism covering DevOps. Have a tip? Email her or reach out @PariseauTT.
Chirag Dekate
