The so-called SaaS-pocalypse has been working its way through the software scene in recent months, with things getting increasingly vicious back in February. While I wouldn’t say that things have settled all too much since the worst of the software sell-off, I do think that there’s an opportunity with some of the names that are better positioned than others to bounce back and make the most of the disruptive force that is AI.
Oracle (NYSE:ORCL | ORCL Price Prediction) stands out as one of the severely punished names that may have been unfairly caught in the downdraft. Larry Ellison, who’s the face of Oracle, didn’t sound all too concerned about what’s been troubling the software industry of late, though.
And he’s right not to be, especially considering Oracle has pivoted most aggressively towards AI with its Oracle Cloud Infrastructure (OCI) business. Undoubtedly, Oracle has been punished for a different set of reasons prior to the latest pullback in software.
Isn’t Oracle more of an AI stock than a legacy software stock at this point?
Perhaps it’s how much the firm is betting on the future of AI that has some on pause on the name, at least of late. Oracle isn’t just jumping on the agentic AI bandwagon, as many software firms are doing; it’s willing to go heavy into debt to be an AI infrastructure top dog. It’s a transformative leap that I think should have investors applauding when a firm like Anthropic introduces more capable AI tools and updates.
After all, the sinking software plays seem to suggest that AI tools really do have transformative potential. And, with that, firms heavily involved with the data center buildout should be soaring rather than sinking. In my view, the lose-lose proposition is opening up an interesting entry point in shares of Oracle.
If it’s being punished for its “go for broke” AI power play, it shouldn’t also be sent to the box for its software business. Arguably, the market should start viewing Oracle as in a win-win position as its AI data center push starts paying off, while the software side also starts paying dividends in the agentic era.
With such a low bar set ahead of the legacy software and new-age AI data center juggernaut, I certainly wouldn’t be surprised to witness such a 180-degree move at some point, perhaps after the AI scene experiences its next big breakthrough moment.
Whether it’s Anthropic, OpenAI, a Mag Seven titan, or a firm from out of left field that delivers it, though, remains to be seen. Either way, I wouldn’t bet against Oracle from either side, especially as we start to discover which software companies have what it takes to survive and thrive in the agentic AI era and which ones are nothing more than a glorified backend with a pretty frontend.
Yes, Oracle is an AI disruptor that’s not to be grouped with other sagging SaaS names
In my view, Oracle has been preparing for the shift for a long time. And, more importantly, it’s since taken action. It’s arguably more of a disruptor than just another disrupted software player. Either way, Ellison and company are playing chess while others might be playing checkers at this crucial time.
Beyond OCI, though, the software side of the business has been rebuilt with real agents. It’s not just AI slapped on the side, sprinkled on top of the existing software, or marketing hype; Oracle is already in the workflow automation fast lane.
Even if the software slump lasts for a while longer, Oracle’s jaw-dropping RPOs are more than enough reason to give Oracle stock the benefit of the doubt, even if you’re not taking Ellison’s word for it that his firm is safe from the SaaS-pocalypse. If AI proves more disruptive to software than anticipated, OCI will flex its muscles further.
With shares of Oracle coming in again after its post-earnings pop of around 9%, there might be an opportunity for investors to get into the AI infrastructure winner while investors and the market are still confused about the growth story, the risks, and the uncertainty. As agents become more capable while RPOs actually turn into cash flows, perhaps Oracle will be able to keep its foot on the gas in a way to make Larry Ellison the world’s richest man again.
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