Oracle Corporation (NYSE:) and Microsoft Corporation (NASDAQ:) Stand to Benefit from Stargate Initiative
Oracle and Microsoft are expected to benefit significantly from their roles in the newly announced Stargate initiative, a $500 billion private-sector investment aimed at advancing artificial intelligence (AI) infrastructure, according to a note from TD Cowen analysts.
The Stargate joint venture, led by SoftBank Group Corp., OpenAI, Oracle, and Microsoft, with technology partners including NVIDIA Corporation and Arm Holdings, marks a major step in AI infrastructure development. Analysts highlighted Oracle as a key beneficiary, noting that OpenAI plans to shift some AI training workloads from Microsoft Azure to Oracle Cloud Infrastructure (OCI) under restructured terms.
Oracle’s role as a critical technology provider in the Stargate initiative is expected to drive significant AI-related capital investments into OCI, potentially boosting its revenues at a compound annual growth rate (CAGR) exceeding 50% through fiscal 2027.
For Microsoft, offloading OpenAI’s training workloads to Oracle could ease supply constraints and allow it to focus on inference workloads, where it generates revenue. This shift could improve Microsoft’s capital efficiency and support Azure’s growth trajectory, potentially accelerating it back to the mid-30% range.
Oracle’s aggressive expansion plans, including a 10-to-20 data center buildout capable of supporting massive AI workloads, will also further solidify its position in the AI infrastructure market. The first facility is expected to go online in 2025, with new capacity to be brought online by 2026.
The analysts described the Stargate venture as a “directional win-win” for both Oracle and Microsoft, with financial specifics remaining unclear.