40 Billion Reasons to Buy Oracle and Nvidia Stock Like There's No Tomorrow

For the last few years, many of the talking points around artificial intelligence (AI) have touched on topics such as how the technology will bring new levels of efficiency to corporate work environments or how chatbots could answer queries about virtually anything in the blink of an eye.

But over the last few months, a new thread in the AI narrative has started to emerge. Infrastructure projects are coming into sharper focus as cloud hyperscalers double down on their commitments to build data centers and buy high-performance chipsets. One of these is the Stargate Project: Between now and 2029, Oracle (NYSE: ORCL), Nvidia (NASDAQ: NVDA), and OpenAI say they will invest a total of $500 billion into data centers and other digital infrastructure in the U.S. It's a plan that should have investors quite excited.

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Let's break down the details of the news surrounding this AI consortium, and assess why Oracle and Nvidia look like tempting buys right now.

Oracle is quietly building a data center empire, and...

Oracle's business includes a number of cloud-based software and infrastructure solutions. Throughout the AI revolution, it has acted swiftly, acquiring graphics processing units (GPUs) from the likes of Nvidia and Advanced Micro Devices, which it has used to build training clusters for its data centers that it can lease to customers. Oracle calls this infrastructure-as-a-service (IaaS), and it's currently the fastest-growing segment of its business -- growing by 49% year over year.

With that said, Oracle's IaaS offering is still scaling -- it generated only $9.3 billion in sales over the last four reported quarters. For reference, that was less than 20% of Oracle's total revenue base.

Nevertheless, I think Oracle's infrastructure services are poised for significant growth. According to recent reporting, Oracle is eyeing 400,000 of Nvidia's GB200 chips -- an order that industry experts estimate could be worth $40 billion. Per the structure of the deal, Oracle plans to lease these GPUs to OpenAI.

The way I think about this partnership is that Oracle is now in a position to multiply the size of its IaaS business by several times, suggesting it could scale up to be worth tens of billions of dollars annually in the coming years.

Image source: Getty Images.

... Nvidia investors should be really excited about it

I see a couple of reasons why this Stargate deal is meaningful for Nvidia.

First, Nvidia's revenue is highly concentrated -- just two customers accounted for 30% of its sales during the first quarter. Although Nvidia does not explicitly indicate which of its customers are its largest, nor say how much they spend, many analysts on Wall Street have concluded that Meta Platforms, Amazon, Microsoft, and Alphabet are among its biggest buyers.

On the surface, this might look like a problem, as all of these cloud hyperscalers are developing their own custom silicon solutions. As they complement existing Nvidia-based architectures with their own chips, that could lead to a revenue headwind for Nvidia down the road.

However, other customers such as Oracle and Elon Musk's xAI are fast emerging as major buyers for Nvidia's chips. This suggests that demand for the company's hardware will remain robust, despite the emergence of rival chips.

In addition, it is important to understand that the Stargate Project is a multiyear initiative. In fact, OpenAI is reportedly considering opening a host of data centers across the country, with its initial build-out with Oracle representing the first phase of that longer-term plan.

Combine all that with the fact that large players in the Middle East are showing rising interest in building massive new data centers of their own -- powered by Nvidia chips -- and Nvidia looks poised to benefit greatly from AI-related capital expenditures for years to come.

Both Oracle and Nvidia stock look like great long-term buys

A glance at the forward price-to-earnings (P/E) multiples for both Oracle and Nvidia might lead you to believe both stocks have gotten expensive. After all, the average forward P/E across the S&P 500 index is about 21.

ORCL PE Ratio (Forward) data by YCharts.

With that said, it's hard to overlook the valuation compression that Oracle and Nvidia have experienced over the last couple of months amid President Donald Trump's tariff and trade war turmoil. Both companies' shares have witnessed nominal rebounds of late. However, each stock trades at a discount to its historical forward P/E level.

In my view, investors have a great opportunity now to pick up share of both Nvidia and Oracle, as the Stargate Project is still in an early stage, and production of Blackwell chips has yet to fully scale.

I think Oracle is taking the right steps to supercharge its long-term growth -- I expect that infrastructure services will be the offerings that turn it into a trillion-dollar business. Regarding Nvidia, I see the Stargate Project as a long-run catalyst and would consider scooping up shares now, as more big deals will likely come to fruition over time.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.