Investing.com– Oracle Corporation (NYSE:ORCL) and Microsoft Corporation (NASDAQ:MSFT) stand 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, TD Cowen analysts said in a note.
The Stargate joint venture, led by SoftBank Group Corp. (TYO:9984), OpenAI, Oracle, and Microsoft, with technology partners including NVIDIA Corporation (NASDAQ:NVDA) and Arm Holdings ADR (NASDAQ:ARM), marks a major step in AI infrastructure development, analysts said
TD Cowen analysts highlighted Oracle as a key beneficiary. OpenAI plans to shift some AI training workloads from Microsoft Azure to Oracle Cloud Infrastructure (OCI) under restructured terms, they noted.
Additionally, 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, according to TD Cowen.
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, according to the analysts.
Analysts also pointed to Oracle’s aggressive expansion plans, including a 10-to-20 data center buildout capable of supporting massive AI workloads. The first facility, expected online in 2025, is part of a broader effort to bring significant new OCI capacity by 2026, further solidifying Oracle’s position in the AI infrastructure market.
While financial specifics remain unclear, TD Cowen described the Stargate venture as a “directional win-win” for both Oracle and Microsoft.
