Core Insights - Oracle is transitioning from a traditional software vendor to a GPU data center operator, leveraging large contracts with clients like OpenAI, Meta, and xAI to dominate the market [1][3] - By fiscal year 2030, AI-related business is expected to contribute 60% of Oracle's total revenue, significantly reshaping its revenue structure and profit margins [1][2] Revenue Structure Transformation - The core of Oracle's new growth model lies in the explosive growth of its AI Infrastructure as a Service (IaaS) within the Oracle Cloud Infrastructure (OCI) business, projected to reach approximately $1,210 billion by fiscal year 2030 [2][3] - AI IaaS revenue's share of Oracle's total revenue is expected to rise from about 5% (approximately $2.6 billion) in fiscal year 2025 to 60% by fiscal year 2030 [3] Capital Expenditure and Financial Pressure - To meet the demand for large-scale GPU clusters, Oracle will require substantial and ongoing capital investments, estimated at around $405 billion from fiscal years 2026 to 2030 [4] - Oracle's total debt and lease obligations are projected to increase from approximately $109 billion at the end of fiscal year 2025 to about $252 billion by fiscal year 2028 [7] Profit Margin Impact - The shift to AI IaaS will lead to structural changes in profit margins, with the gross margin for traditional software business exceeding 90%, while the capital-intensive GPUaaS business is expected to achieve only a 40% gross margin [10] - Non-GAAP operating profit margin is forecasted to decline from about 44% in fiscal year 2025 to approximately 38% by fiscal year 2030 [10] Valuation and Market Sentiment - Analysts predict Oracle could achieve a non-GAAP EPS of approximately $16.50 by fiscal year 2030, reflecting a compound annual growth rate of over 20% from fiscal years 2025 to 2030 [11] - Despite the attractive growth story driven by AI, analysts believe that much of the optimistic outlook is already reflected in Oracle's current stock price of around $313, with a target price of $320 based on a similar valuation approach to Microsoft [15]