Oracle (NYSE: ORCL), founded in 1977, has been a consistent player in nearly every major technology evolution. Originally rising to prominence with its database management software, Oracle quickly adapted to changes in the tech landscape, helping businesses transition through the rise of the internet, cloud computing, and now, artificial intelligence (AI). Today, the company operates some of the industry’s most advanced data center infrastructure, which is playing a key role in the development and deployment of AI technologies.
As Oracle prepares to report its fiscal 2025 first-quarter results for the period ending Nov. 30, there’s one key number that investors should pay close attention to. It’s not just about Oracle’s financials but also about its role in the rapidly expanding AI infrastructure market.
Oracle’s Role in AI Infrastructure
To power AI applications, especially those focused on improving chatbots and software, businesses require vast amounts of computing power. The brains of modern AI systems, large language models (LLMs), now contain trillions of parameters, allowing them to tackle an impressive range of tasks. But training these LLMs and then deploying them for real-world use – a process known as AI inference – requires immense computational resources.
This process takes place inside data centers, which are filled with high-performance hardware like graphics processing units (GPUs), typically sourced from leading companies such as Nvidia. Oracle, along with other tech giants, builds and manages these data centers, offering them as a service to developers and businesses. Developers generally rent this infrastructure by the minute, with a preference for faster, more efficient data centers that can reduce their costs. This is where Oracle’s infrastructure comes into play.
The Power of Oracle Cloud Infrastructure (OCI) Superclusters
Oracle’s data centers are built around its cloud offering, Oracle Cloud Infrastructure (OCI). One of the key components of OCI is its Superclusters, which provide developers with access to massive computing power. Each Supercluster is capable of supporting up to 65,536 Nvidia GPUs, and Oracle is preparing to scale that number even higher, with the upcoming addition of more than 131,000 Nvidia Blackwell GPUs. This makes Oracle a leader in terms of the sheer scale of its AI-capable infrastructure, positioning it as one of the most powerful data center providers available.
The company’s unique approach to networking further sets it apart. Oracle uses its proprietary random direct memory access (RDMA) technology to speed up the transfer of data within its data centers. RDMA enables faster data movement compared to traditional Ethernet networks, which significantly reduces latency and, by extension, lowers costs for developers.
Automation and Scalability
Oracle’s data centers aren’t just powerful; they are also incredibly efficient. The company has streamlined its operations by automating virtually all aspects of its data center management. This means that Oracle can operate its data centers with minimal human intervention, allowing the company to reduce overhead and build new facilities more quickly. This automation allows Oracle to scale its operations in response to the rapidly growing demand for AI infrastructure.
As a result, Oracle is widely regarded as one of the most cost-efficient data center operators in the industry. This reputation is helping the company attract high-profile AI start-ups like OpenAI, Cohere, and xAI (founded by Elon Musk). However, even with Oracle’s best efforts, demand for its AI infrastructure is so great that the company has struggled to keep up.
Growth and Expansion Plans
As of the first quarter of fiscal 2025, Oracle had 162 data centers either in operation or under construction. But the company has ambitious plans to expand this number significantly, aiming to eventually operate between 1,000 and 2,000 data centers. This expansion will help meet the surging demand for AI processing power and support Oracle’s growing customer base in the AI space.
Oracle’s growth is not just a reflection of its market share but also of its ability to meet the rising need for more efficient and scalable AI infrastructure. The company’s leadership in cost-efficient and high-performance data center operations positions it to continue playing a key role in the development of AI technologies in the coming years.
