Oracle Corp (NYSE:ORCL, ETR:ORC) has solidified its position as a major player in the artificial intelligence (AI) infrastructure market, following its $300 billion deal with OpenAI, according to Bank of America analysts.
The investment banking firm said Oracle’s accelerated capital expenditure and increased GPU density have positioned the company alongside established hyperscalers in the AI compute space.
Analysts estimate the AI infrastructure market could reach $200 billion in annual spending by 2028, growing at a compound annual rate of 42% over five years.
Bank of America highlighted that Oracle’s approach to AI infrastructure offers attractive project economics. Using a bottom-up model based on the OpenAI deployment, the bank calculated an initial internal rate of return (IRR) of 9%, rising to 16% on contract renewals.
"Foundational project economics are expected to shift from capital-intensive strategic entry points into cash-yielding infrastructure assets," analysts wrote.
Oracle’s financing strategy also reduces risk, the analysts noted. The company has largely funded projects through low-cost debt, including an $18 billion bond issuance in September and another $38 billion offering planned this week. Contracts are structured as non-cancelable, non-modifiable, take-or-pay agreements, ensuring stable cash flows and cost visibility.
“Oracle’s disciplined investment approach contrasts sharply with other hyperscalers that are building speculative capacity,” analysts noted.
Bank of America maintained a Buy rating on Oracle with a price target of $368.