If you want to know whether the AI bubble is bursting, the only publicly traded company that tells you is Oracle. That's right, the database company. Oracle has burned its boats and pivoted to AI, but not in any usual way. It's not a foundation model builder like OpenAI or Anthropic. It's not quite a neocloud, though it has entered the same bare-metal business as CoreWeave. It's a SaaS company that has made an audacious bet on a very specific future version of AI as its traditional business has gracefully declined. It is significantly older than most AI competitors, save Microsoft, and has decided its future involves an enormous compute deal with OpenAI, a company that does not make money.

Whether OpenAI is good for its commitments to Oracle depends on how much money it can raise and how quickly it can become profitable. The risk for Oracle is that it may be sinking a lot of money into building data centers for OpenAI, only for OpenAI to be unable to pay Oracle the $300 billion it agreed to in their contract. Oracle and OpenAI did not respond to requests for comment.

But the OpenAI play - and the pivot to AI generally - suggests a specific vision: The key place to make money isn't training foundation models. The real money is inference, or using AI models to output results on data not in the training set. So Oracle has looked at some startups' businesses and decided they are actually just features that can be added to Oracle's existing capabilities - which is pretty much what Oracle has been up to for its entire existence.

Oracle is already an enterprise business, so it has the existing relationships and large salesforce to sell its vision: there isn't much room for the AI stack to fragment. Rather, it will consolidate under existing players. Oracle intends to be the dominant player.

Wall Street wants to bet on AI, and it can't bet on OpenAI because it's not public yet. So the best way to do it now is through Microsoft and Oracle. Microsoft has a more complicated business, so it's not a pure AI bet. Oracle, on the other hand, is cleaner. That means you can take the temperature of the entire AI boom by checking how many people are betting Oracle won't repay its loans on time - those are the credit default swaps. Oracle's stock price also reacts to assorted industry events, providing a bellwether about the AI revolution - or the AI bubble, depending on how you view it.

But there's always a tremendous gap between vision and execution, as Oracle's history shows.

Let's get it out of the way: Oracle founder Larry “Bad Doggy” Ellison is out of his fucking mind. He has a short attention span, a willingness to promise things his engineers have not yet built, a tremendous ego, and a competitive drive that could power every AI data center on Earth and then some. Ellison is nominally the chief technology officer and executive chairman, and Clay Magouyrk and Mike Sicilia are nominally the co-CEOs. But Oracle has always been the Larry show, starring Larry, even when he's busy cheating at yacht races or whatever.

Oracle's move to focus on AI means leaving behind the high-margin, low-growth, low-capital-expenditure database business that is its bread and butter to jump to the low-margin, high-growth, high-capex neocloud business that Oracle has taken out $43 billion in debt to build in just fiscal 2026. Why do that? According to Paul Kedrosky, a longtime VC at SK Ventures, Larry got bored.

“This is the story of Larry forever,” says Kedrosky. “Whenever he left to go sailing, he’d say, ‘This company’s not as much fun as it used to be.’ The high-level take is that the orthodox company is low-growth and high-margin and makes him feel old and uncool.”

In the 1990s, one reason Oracle became a hot property was Ellison. He was among the various futurists making predictions about what the internet would do to society. In 1996, Ellison appeared on The Oprah Winfrey Show to hype what he called “the network computer.” (As part of the appearance, Oracle promised to give a network computer to each of almost 300 kids at a primary school in Menlo Park.) This was a lightweight device, even one that could be treated as a throwaway, that would connect to applications stored online. If you are thinking, "Boy, that sure sounds like a modern phone," you're right. If you are also thinking, "Boy, that sure sounds like the cloud," you're also right.

The network computer flopped. The iPhone, which kicked off the modern era of lightweight, disposable computing devices, was introduced more than a decade later, in 2007. Oracle veered away from its bold vision of the cloud, while a true believer peeled off to form his own company: Marc Benioff, who founded Salesforce in 1999. Amazon's AWS venture into cloud computing was in 2006, a decade after Ellison had predicted that people wouldn't need to keep software on their own computers.

So why didn't Oracle lead both revolutions, if Ellison saw them coming a decade out? The iPhone was a consumer product, and Oracle made primarily enterprise databases. Oracle knew how to sell to businesses - it's why they'd so thoroughly stomped competition such as Relational Technology Inc. and Cullinet in the first place - but Ellison didn't know how to make consumers choose to buy things rather than get forced to use them by their employer.

The failure of the network computer also made Ellison weirdly recalcitrant about the cloud. He refused to take a second crack at the idea until 2011, even mocking it as “complete gibberish.” Oracle never really recovered from its lost lead. Despite its strong enterprise software business, it lags Amazon, Google, Microsoft, and Alibaba in market share, and is barely ahead of Salesforce. Given Ellison's competitive streak - one of his biographies is titled Everyone Else Must Fail - this has to sting. The worst part might have been losing to one of Oracle's biggest rivals, Microsoft.

Still, the majority of Oracle's business, as of its most recent earnings results, is “cloud and software.” The category represented 88 percent of the company's revenue in the three months ended February 28th, which is the third quarter in Oracle's 2026 fiscal year. (There are also hardware and services businesses, but for our purposes, they are negligible.) The majority of that is software support, which “substantially all” customers renew every year “in order to continue to benefit from technical support services and the periodic issuance of unspecified updates and enhancements” to the applications and infrastructure they also use. That brought in a shade under $5 billion in Oracle's third quarter. The next biggest was “cloud infrastructure,” which had revenue of about $4.9 billion.

The customer support business had zero percent growth in the third quarter. Its database and applications businesses, though very profitable, aren't growing and may even be declining, says analyst Gil Luria of DA Davidson.

The cloud business, on the other hand, is growing. It's an “okay business, very fast-growing with low profitability,” says Luria. “Oracle cloud has single-digit margins, maybe at best teens. But they've been growing it very fast.”

So when ChatGPT launched the modern era of AI hype in Silicon Valley, it was inevitable that Ellison would take an interest. By February 2025, Ellison was telling former UK Prime Minister Tony Blair that AI was “a much bigger deal than the Industrial Revolution, electricity, and everything that's come before.” In September, Oracle “shocked the markets” with a $300 billion deal with OpenAI to build data centers, one of the largest cloud deals ever. Oracle's move into the bare-metal business - renting out servers to AI companies - can be thought of as an extension of the cloud business. Having missed the initial run on the cloud, it seems Ellison has decided Oracle can't be left out this time.

In some ways, Oracle was an obvious partner for OpenAI. It's one of the few Big Boys that isn't trying to compete with Nvidia by building its own chips - though it does have a very close relationship with AMD. But there's one other benefit that probably tickled Ellison, a longtime Microsoft hater who even resorted to sending private detectives to sort through Microsoft's trash: OpenAI's biggest partner for compute used to be Microsoft. The deal was pure, flashy, competitive Ellison - and propelled Oracle's shares to an all-time high.

But with the deal came another big personality: Sam Altman, who has a reputation in Silicon Valley as a sociopathic liar with a people-pleasing streak. OpenAI is the Sam Altman show, as became very clear in 2023 when he was briefly deposed as OpenAI's philosopher-king. Tying Oracle so closely to OpenAI meant that Oracle was no longer the arbiter of its own fate.

And indeed, as OpenAI soon announced a series of other massive deals, Oracle's shares fell. Now, Oracle serves essentially as a public market proxy for betting on OpenAI's future - for better and for worse.

This time when Ellison predicted the future, he wasn't the sole true believer, points out Nick Patience, the AI lead at the Futurum group. “It's a more grounded bet” than the network computer, Patience says. Microsoft's Satya Nadella and Google's Sundar Pichai have basically the same vision. On the other hand, Ellison is “piggybacking on Sam Altman, which is probably a dangerous place to be,” Patience notes.

Oracle's OpenAI deal was basically kismet. Oracle had been working on a data center in Texas for Elon Musk, a friend of Ellison's, who made an abrupt about-face when he decided his company xAI could build his own data center faster. Just as Musk left Oracle in the lurch, a LinkedIn message from OpenAI infrastructure chief Peter Hoeschele arrived in the inbox of a sales leader at Oracle, Bloomberg reported. The resulting deal was significantly larger than the one Oracle had been discussing with Musk, with options to expand it further.

To fulfill the deal, Oracle will build five very large data centers. “All told, they'll require millions of chips and consume 4.5 gigawatts of power - more than all the homes in Chicago,” Bloomberg wrote. Oracle is planning to build them with an initial completion date in 2027, though according to Bloomberg, that has already slipped to 2028. It's a more aggressive bet than any other major company has made on AI, and one that the less reckless - or perhaps, less desperate - Microsoft shied away from.

Oracle's previous chief executive officer, Safra Catz, was skeptical of the financial benefits of the cloud. It had lower margins and required costly data centers, Bloomberg reported, citing employees who'd heard Catz's reservations. She was replaced last year, shortly after the OpenAI deal, by Magouyrk and Sicilia, who previously ran Oracle's cloud business and applications. In the announcement, Ellison, unsubtly, is quoted saying that “Clay and Mike committed Oracle's Infrastructure and Applications businesses to AI.” Oracle had burned the boats.

OpenAI, for its part, needs Oracle for its investment-grade credit rating, notes Stijn Van Nieuwerburgh, a professor at Columbia Business School. OpenAI doesn't have one, and couldn't support the necessary compute buildout on its own. Effectively, OpenAI is renting Oracle's creditworthiness.

Of the hyperscalers, however, Oracle has the lowest credit rating. It also has the greatest debt load, even before the infrastructure buildout came into play.