Gene Munster says Oracle Corp‘s (NYSE:ORCL) $300 billion deal with OpenAI highlights just how early the company—and others—are in the AI race, sending shares soaring last week despite a quarterly report that missed Street estimates.
Oracle's Historic Contract
A surge in Oracle's stock price briefly cemented co-founder and Chief Technology Officer Larry Ellison as the richest person in the world. While the title was short-lived, Munster, a managing partner at Deepwater Asset Management, says Oracle's $300 billion contract with OpenAI "cements” the company’s position as an AI “hyperscaler."
"The deal underscores just how early we are in AI, and how massive the infrastructure layer will prove to be," Munster said. "That foundation will power AI-native companies, which in turn will reshape industries and change the world."
Munster said Oracle is no longer just a tech stock benefitting from cloud growth, and that the OpenAI contract makes the company a key AI infrastructure player.
The OpenAI deal is part of Oracle's $455 billion in remaining performance obligations for AI workloads. This number was up 359% year-over-year and more than double that of analyst estimates. The deal and backlog have changed how investors view Oracle, according to Munster.
"Investors now see a multiyear growth profile tied to AI workloads anchored by OpenAI's massive, long-term commitment."
The backlog and AI growth is not without risk, Munster says, as Oracle is now more reliant on one customer.
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AI Growth Still Early
Munster said the new Oracle, OpenAI tie-up shows that AI infrastructure could be in the early phases.
"After June earnings I revised my view that we were in the second inning. I'm now debating if we're in the first inning," Munster said of the AI buildout.
Munster said that it's likely that the AI buildout should have increased growth rates "for the next few years."
"The size of Oracle's backlog highlights that AI demand is stretching beyond available supply and mind-blowing levels."
The investor said expectations continue to increase for AI investment, which means companies that are AI hyperscalers could see increased backlogs and guidance.
Oracle Stock Price Action
Oracle stock is up 2% to $298 on Monday versus a 52-week trading range of $118.86 to $345.72. Oracle stock is up 79.7% year-to-date in 2025.
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