Just a few months ago, AI heavyweights such as Nvidia, Microsoft, and Oracle were considered untouchable winners of the new era of data-hungry models. But the recent market correction has laid bare how nervous investors have become. Concerns that the billions invested in data centers and cloud capacity may not translate into profits quickly enough have put pressure on many AI stocks. Oracle also came under scrutiny, losing about a quarter of its market capitalization within just four weeks – a significant setback for a company that sees itself as one of the key architects of global infrastructure. Oracle’s willingness to spend heavily is no secret. Recently, the software giant raised USD 18 billion in new debt to accelerate the expansion of its AI-driven cloud business. The funds are intended to support mega-contracts with partners such as OpenAI, the developer of ChatGPT. With this move, Oracle enters an investment dimension previously dominated by hyperscalers like Amazon, Microsoft, and Google. However, the additional billions are not only earmarked for infrastructure; share buybacks, debt repayments, and acquisitions are also possible.
Management’s confidence is fueled by a rapidly growing cloud division. CEO Safra Catz recently raised the revenue target for the current fiscal year: instead of a 70% increase, Oracle now expects 77% growth to USD 18 billion in this segment. This outlook triggered a roughly 30% share price surge in September – the largest in a quarter century. The subsequent correction, however, shows that investor confidence remains volatile. The company’s current business performance is less susceptible to fluctuations. In the first quarter of fiscal year 2025/26 (as of September 30), cloud revenue continued its long-term upward trend, rising 27% to USD 7.2 billion. The order backlog soared 359% to USD 455 billion, with additional multibillion-dollar contracts expected. Chairman and founder Larry Ellison emphasized that connecting Oracle’s data centers to major hyperscalers such as AWS, Azure, and Google Cloud has significantly expanded customer access. He views the multi-cloud strategy as one of the most important growth drivers for the coming years.
Recent announcements illustrate the scale of demand: together with OpenAI and other partners, Oracle is investing in a data center complex with a total capacity of more than 8 gigawatts (GW). The overall volume of this initiative has already surpassed USD 450 billion over the coming years. The company also confirmed the construction of a 1-GW data center in Michigan, with groundbreaking scheduled for early 2026 – another milestone in the global AI landscape. According to Oracle, USD 65 billion in new cloud infrastructure commitments were signed within just a 30-day period of the last quarter, including a USD 20 billion deal with Meta Platforms. By 2030, the company expects USD 166 billion in cloud infrastructure revenue. Despite the strong growth in its cloud business, Oracle’s latest corporate results fell slightly short of expectations. Revenue grew 12%, while earnings per share increased only 6%. Compared with the striking cloud figures, the overall results appear somewhat muted. The heavy AI investments are clearly weighing on costs more than they are contributing to earnings in the short term. Oracle thus finds itself in a paradoxical moment between short-term skepticism and a potentially dominant long-term position. For now, the focus remains on the multibillion-dollar investments and the exploding order backlog - factors that may enable Oracle to build an ecosystem unmatched by competitors. At the same time, however, concerns are rising that the monetary payoff may not become visible for years.
Investors may be wise not to take on the full risk of Oracle shares directly. The current volatility has made it possible to structure attractive Barrier Reverse Convertibles (BRCs), which can deliver high returns even in a sideways market. The new soft-callable BRCs from Leonteq offer double-digit coupons, and thanks to a low protection barrier, the invested capital remains well protected - even if Oracle’s stock continues to decline. The CHF-denominated version comes with a 13.00% annual coupon, while the USD version offers an impressive 16.40% p.a. Both products provide a solid 45% risk buffer, protecting the nominal value over the maximum 15-month term. Coupons are paid quarterly. Due to the soft-callable structure, the maturity may shorten: after six months, the issuer has the right to redeem both BRCs early at 100% every three months.
More risk-tolerant investors can also use leveraged products to trade the AI stock. Leonteq offers a total of 14 mini-futures and 13 knock-out warrants that allow for leveraged participation in Oracle’s price movements. Both long and short positions are available.
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