Larry Ellison owns 42% of Oracle (NYSE: ORCL)A technology giant of $ 465 billion that builds some of the most powerful data centers for the development of artificial intelligence (AI).
Nvidia (Nasdaq: NVDA) Oracle and most other technology companies with Datacenter chips called Graphics Processing Units (GPUs). Nvidia has had a striking increase in income in the past year and GPU’s demand continues to exceed the supply. However, some investors started to wonder how long Oracle and his colleagues can throw billions of dollars at the chip giant to feed their AI ambitions.
Ensures that the AI train may start to lose steam, an important reason is that Nvidia shares trades 14.5% compared to the all time. But this month the market may have missed comments from Ellison during the financial analyst meeting of Oracle that suggest more fantastic news for the investors of Nvidia.
Oracle data centers are unique because they are automated. Each is operational identical, regardless of its size, and because they do not require human employees, it enables the company to build them quickly. Plus, Oracle’s RDMA (Random Direct Memory Access) GPU network technology can flow more quickly from one point to another than traditional Ethernet networks.
Since most AI developers pay per minute for computer capacity, the data centers of Oracle can result in considerable cost savings compared to competing infrastructure. That is why the demand rises from leading AI startups such as OpenAi, Cohere and Xai. Oracle had 85 data centers in motion with 77 more under construction from the first quarter of 2025 (ending on August 31), but Ellison thinks it could work no less than 2,000 in the long term.
Next year Oracle is planning to offer a cluster of 131,072 GPUs, which is a big step than the largest clusters now, around 32,000 GPUs. But there is another difference: the new cluster will use the newest Blackwell -Chips from Nvidia, which can perform AI insertion with 30 times the pace of its flagship H100, which Oracle currently uses. Theoretically, developers will enable developers to build the largest AI models in history.
Nvidia will consider that considerably. It generated $ 26.3 billion in data center income during his tax 2025 second quarter (ending on July 28) mainly from the GPU turnover, which was an increase of 154% compared to the period of the year ago. That growth rate delayed compared to previous quarters because the figures have become so large, but Nvidia’s customers do not display signs of withdrawal.
Oracle even spent $ 6.9 billion on Datacenter infrastructure in tax 2024, and it is planning to double That figure in tax 2025. But it gets better.
During the analyst meeting, Ellison told the public about a dinner with which he arranged Tesla CEO (and Xai founder) Elon Musk and Nvidia CEO Jensen Huang in Nobu in Palo Alto. He remembered himself and Musk begging Huang for more GPUs:
Please take our money … take more of it. You don’t take enough. … we need you to take more of our money. Please.
Oracle Cloud Infrastructure (OCI) generated $ 2.2 billion in income during Q1 (mainly by renting data center capacity for customers), which was an increase of 46% compared to the period of the year ago. However, Oracle ended the quarter with a record of $ 99 billion in remaining performance obligations (RPOs), no less than 53% jumped. The company said it had signed 42 new deals for GPU capacity worth $ 3 billion during Q1, which contributed to the backlog.
Oracle cannot serve all those AI developers – or convert RPO into income – until it yields more data centers, which is why Ellison Huang beg for more GPUs.
Tesla is in a similar position. It fights for supremacy in the autonomous self-driving software industry, and it is trying to bring a cluster of 50,000 GPUs online at the end of this year to further train its AI models. Tesla will spend $ 10 billion on that infrastructure, but it needs more capacity over time.
Image source: Nvidia.
Oracle and Tesla are not the only companies that are big on data centers. Microsoft spent $ 55.7 billion in capital expenses (Capex) mainly with regard to AI infrastructure during its tax 2024 year (ending on June 30), and it is planning to spend even more in tax 2025. Likewise, AmazonThe Capex expenditure is on its way to $ 60 billion this calendar year.
Based on Nvidia’s Trail-12-Mendaries per share of $ 2.20, the shares are traded at a price-gain ratio (p/e) of 52.7. That is expensive compared to the 30.9 p/e ratio of the Nasdaq-100 Technology Index, who organizes a lot of the Big-Tech colleagues from Nvidia.
However, Nvidia’s tax 2026 starts at the end of January 2025 and Wall Street expects the company to deliver $ 4.02 in profit per share for the year. That places its stock on a forward p/e ratio of only 28.8. In other words, investors who are willing to hold Nvidia shares for at least a year and a half and a half year can run a bargain at the current price – assuming that the prediction of Wall Street appears to be accurate.
A delay in Nvidia’s cases will eventually be because the enormous size of the current AI expenditure will be very difficult in the long term. Moreover, the competition is slowly coming online in the GPU space, which could eradicate the market share of the company in the coming years.
However, based on the facts that are today, Nvidia shares is probably a good buy for the current price. The designated AI expenditure of some of the largest customers suggest that a delay is not on the immediate horizon.
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Oracle -founder Larry Ellison has just delivered fantastic news for Nvidia Stock Investors was originally published by The Motley Fool
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