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Oracle seen as AI infrastructure loser as customer lease risk rises
The market strategist also flagged Oracle’s own concerns about monetizing heavy AI spending, contrasting its long lease and capex commitments with shorter customer contract terms.
Investors remain split over whether to stay in the AI trade as spending rises without clear returns, and a Miller Tabak strategist says Oracle is among the biggest risks in the next phase of AI infrastructure consolidation.
On CNBC, Matt Maley argued that the AI infrastructure race likely started with five or six major players but expects only one or two to emerge on top. He specifically warned that a major Oracle customer, widely believed to be OpenAI, could potentially step away from some data center lease commitments.
Maley’s concern centers on Oracle’s ability to monetize its AI investments, pointing to the company’s acknowledgment that its AI bet may not deliver the returns management previously expected. While Oracle Cloud Infrastructure has been a bright spot, with OCI revenue growing about 93% year over year and performance obligations reaching roughly $638 billion for revenue visibility, bears say the business could be stuck with long-duration commitments.
The strategist also cited the mismatch between Oracle’s long-dated obligations, including data center lease terms stretching 15 to 19 years, and the shorter duration of some of its biggest customer commitments, including major AI infrastructure contracts. He contrasted Oracle with Amazon, which Maley said has “the whole package” to win and withstand competitive pressure, alongside Google.