Oracle is set to emerge as a major financial beneficiary in the next phase of Artificial Intelligence adoption, according to a bullish new report from Wells Fargo.
The investment bank projects “significant upside” for the technology giant, citing the surging demand for its cloud infrastructure platform as enterprises begin shifting AI training and inference workloads away from established hyperscale cloud providers.
The firm’s optimism centers on the growing traction of Oracle Cloud Infrastructure (OCI), which is gaining market share by offering performance and cost advantages crucial for intensive AI workloads. The transition to OCI is being driven by factors beyond just pricing.
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Wells Fargo highlights that Oracle’s strategy has been to challenge the breadth and market share of Amazon Web Services (AWS) and Microsoft Azure by focusing on deep performance and cost optimization, particularly for specialized AI and database workloads.
Unlike the shared infrastructure models of its larger competitors, OCI is known for its bare-metal GPU instances that eliminate virtualization overhead. This design choice translates directly into superior and more consistent processing power for demanding tasks like training massive foundational AI models. Benchmarks have indicated that OCI offers up to four times the cluster networking bandwidth as AWS for clustered workloads, and in some analyses, the cost of a billion-parameter GPT-3 training run on OCI was found to be 35% lower than on AWS and 41% lower than on Google Cloud.
A crucial element is Oracle’s ability to rapidly deploy high-throughput, GPU-rich clusters. While AWS and Azure offer a wider array of general cloud services and a larger global footprint, Oracle has locked in critical deals with top AI model developers, including its blockbuster partnership with OpenAI to provide cloud computing power, as well as working with companies like Cohere and Abjad AI. For instance, Oracle will be the first hyperscaler to offer an AI supercluster powered by 50,000 AMD Instinct MI450 Series GPUs starting in 2026, showcasing its commitment to scaling its dedicated AI infrastructure.
OCI generally offers a more predictable pricing model, which contrasts sharply with the often complex, opaque, and high data egress (outbound data transfer) costs of AWS and Azure. OCI’s lower egress fees and globally consistent pricing across all regions offer a significant financial advantage for enterprises moving massive data sets required for deep learning.
The report concludes that OCI is capturing this demand because enterprises are no longer just looking for a general-purpose cloud; they are looking for the most cost-effective and high-performing engine for their specialized AI operations.
Operational Leverage and Financial Outlook
The report suggests that this AI-driven demand will fundamentally change Oracle’s financial trajectory.
Wells Fargo claimed that Oracle’s overall revenue would begin to expand faster, driven by the increasing magnitude of long-term cloud contracts and the sustained expansion of its lucrative database and applications businesses, which are increasingly being migrated to OCI. Oracle’s total remaining performance obligations (RPO)—a key indicator of future revenue—hit a record $455 billion in Q1 Fiscal 2026. The analyst also noted that Oracle’s operational leverage is improving as the company rapidly expands its data center footprint. As more customers migrate to the high-margin OCI platform, the efficiency and scale of the infrastructure business are expected to help margins grow even more.
While the research did not provide a specific price objective, Wells Fargo’s confidence in “significant upside” is based on the expectation that expenditure on AI infrastructure will continue to rise dramatically across all sectors through 2026, with Oracle firmly positioned as a primary alternative to the legacy hyperscalers.