Oracle Corp (NYSE:ORCL) just pulled back the curtain on its cloud ambitions at OCI Day, giving investors a close-up look at its AI-powered data center expansion.

While AI demand continues to surge, JPMorgan analyst Mark R. Murphy remains cautious, maintaining a Neutral stance on Oracle stock with a $135 price target, below its current trading level of $145.86.

AI Demand: Booming, But Is It Enough?

Oracle is doubling down on its AI infrastructure, expanding its customer-facing regions from 69 to 101 in the past year. But while the company insists demand is outpacing supply, Murphy notes that this messaging feels less urgent than before.

Still, Oracle's investment in AI data centers suggests confidence in sustained demand, despite growing chatter about an "overbuild" or even an AI bubble.

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Training Vs. Inferencing: Oracle Sees No Difference

One of the most debated topics in AI infrastructure is the difference between training (building models) and inferencing (running models). While Microsoft Corp (NASDAQ:MSFT) leans heavily on inferencing for steady revenue, Oracle argues that for major customers, both processes look the same. This implies a more persistent AI compute need than skeptics might believe, said Murphy.

Bubble Concerns? Oracle Hedging Its Bets

With Microsoft CEO Satya Nadella warning of an AI "overbuild" and Alibaba Group Holdings Ltd's (NYSE:BABA) (NYSE:BABAF) chairman hinting at a potential bubble, Oracle's response was refreshingly pragmatic, Murphy noted.

Oracle Executive Vice President Clay Magouyrk dodged long-term predictions, instead emphasizing infrastructure flexibility — stating Oracle could repurpose its GPUs for general computing or storage if AI demand wanes. This adaptability could prove crucial if the AI hype cycle falters.

Oracle's Data Center Push: Big, But Not The Biggest

The event took place at Oracle's Novva facility in Utah, a massive operation but one dwarfed by neighboring Amazon.com Inc (NASDAQ:AMZN) and Boeing Co (NYSE:BA) data centers.

Oracle also showcased plans for an even larger facility in Abilene, Texas, suggesting its AI cloud ambitions are just getting started.

Murphy sees Oracle's AI-driven cloud expansion as a long-term play, but acknowledges near-term challenges — particularly hefty capital expenditures cutting into free cash flow.

While Oracle's growth trajectory is promising, it still faces hurdles in keeping up with hyperscaler giants. For now, the AI gold rush continues — but not without risks.

ORCL Price Action: Oracle stock is down 5.41% at $137.97 Thursday morning at publication.

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