Why Oracle Stock Rose Nearly 15% Last Month
Key Points
An expanded partnership with Alphabet and strong financial results from tech peers helped send Oracle higher.
Analysts and investors are warming to Oracle stock again, but it's still too early to tell whether its AI spending spree has paid off.
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Shares of Oracle Corporation (NYSE: ORCL) gained ground last month as the company expanded its artificial intelligence deals and as investors renewed some of their optimism in the tech space. Strong quarterly results from a handful of AI cloud companies also helped drive Oracle higher.
As a result, Oracle shares jumped 14.8% in August, according to data provided by S&P Global Market Intelligence.
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An expanding AI footprint
Oracle is in the midst of expanding its data center capacity to offer more companies cloud-based AI services. And at the beginning of the month, Oracle's stock posted significant gains amid an expanding partnership with Alphabet's Google.
The company said that Google will integrate its latest Gemini AI models directly into Oracle's AI Agent Studio, which will enable Oracle's Cloud Infrastructure (OCI) customers to create and deploy AI agents. This was of particular interest to Oracle shareholders because the company has invested heavily in expanding its OCI to compete in the AI space.
Oracle's share price continued higher during the month after fellow tech peer Microsoft reported strong quarterly results, including $100 billion in annual revenue from its Azure cloud. Investors largely viewed that as proof that investing in building out AI infrastructure can pay off.
Oracle investors have been worried about the company's surging capital expenditures, which rose 162% in fiscal 2026 to $55.7 billion. Microsoft's recent success helped reassure Oracle shareholders that the company could similarly benefit.
And finally, Oracle's share got an additional boost when CoreWeave reported second-quarter revenue growth of 112%, and Nebius reported second-quarter sales that jumped 454%. Both of these companies provide cloud computing to customers, and their rapidly expanding revenue encouraged Oracle shareholders that Oracle is on the right path as it expands its AI cloud services.
Oracle continues rising, but questions remain
Oracle's shares continued to rise in September and recently popped after three analysts raised their price targets for the stock. Their optimism is fueled by Oracle's expanding opportunities in artificial intelligence.
And yet there are still some unanswered questions for Oracle shareholders. The most important being whether the massive financial investments the company is making in AI will actually pay off over the long term.
Investors have grown increasingly skeptical that spending at all costs is the right strategy for an AI company, including Oracle. They'll get some clarity on Oracle's direction later this week when the company reports its fiscal 2027 first-quarter results on Sept. 10.
With Oracle's spending on the rise, and with more likely on the way, Oracle stock could be volatile for a while. It's already down 30% over the past 12 months. I think the stock could still be a good long-term bet, but investors should understand the risks and be prepared for some more share price swings.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Oracle. The Motley Fool has a disclosure policy.
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