Image courtesy of 123rf.com

Over the week, the stocks of both Nvidia (NVDA) and Oracle (ORCL) took a hit, dropping by 0.8% and 10% respectively. The tech heavy Nasdaq 100 (NDX) Index followed suit with a 0.11% decline. While Nvidia represents the hardware vanguard with its AI-oriented GPU dominance, Oracle represents legacy software embedded into governmental agencies and enterprises.

More so since President Trump’s inauguration, Oracle has been tied with AI through the $500 billion Stargate joint venture between Oracle, OpenAI and SoftBank, but also supported by Nvidia, Arm and Microsoft.

Suffice it to say, Stargate is the economic backbone of Trump’s second term, facilitating the re-industrialization of America, fortifying national security/surveillance and expanding both digital and energy infrastructure.

A year ago, we leaned heavily against AI being a bubble, which turned correct as AI and AI-adjacent stocks like Micron (MU) gained double- and triple-digit gains. However, that was prior to the acceleration of circular financing for GPU deals.

Given Oracle’s weight in this sector, and its drop after Wednesday’s Q2 2026 earnings report, should investors consider this a precursor to AI bubble deflation?

Is Oracle Growing at an Expected Pace?

In September’s Q1 (fiscal 2026) earnings call, Oracle’s Executive Chairman Larry Ellison noted that the company is “far ahead of any of the other application companies” in terms of building apps with AI. Combined with Oracle’s embeddedness across the database sector, Ellison concluded that his business is “better positioned than anybody to take advantage of inferencing.”

Taking this into account, Oracle issued a forecast to exceed $500 billion in remaining performance obligations (RPO) by the end of 2025, having achieved $455 billion in that quarter. For a Software-as-a-Service (SaaS) company like Oracle, RPO is a key metric by which the company expects to recognize total contracted future revenue that is yet to be fulfilled. In other words, RPO is the total dollar value of the company’s backlog, one that is not cancelable because of contractual obligations.

Fast forward to latest Q2 earnings on Wednesday, and Oracle has indeed crossed RPO at $523 billion, representing 438% year-over-year growth. However, the company’s revenue came at $16.06 billion for the quarter, under the LSEG-derived expectation of $16.21 billion.

The bulk of the company’s revenue came from cloud, at $8 billion (up 34%), while its fastest growing division is Cloud Infrastructure as IaaS, at $4.1 billion (up 68%). Oracle’s Cloud Application division grew 11% to $3.9 billion.

From the year-ago quarter, Oracle’s net income as a percentage of revenue increased from 22% to 38%, effectively doubling to $6.135 billion. What can be concluded from this?

Oracle definitely has a strong future indicator by significantly crossing its RPO forecast. However, the revenue miss indicates that the conversion of this massive RPO backlog is still in its early stages. More importantly, the high-margin cloud services growth supports the growth narrative.

Overall, Oracle’s Q2 results confirm the company’s successful execution of AI/cloud/infrastructure transformation. Perhaps even more significantly, investors should not underestimate Larry Ellison’s embedding in the Trump administration.

From Silicon Valley to the White House: Ellison’s Strategic Access

With the recent launch of the Trump Gold Card to streamline citizenship, it is becoming even clearer the degree to which the Trump presidency is transactional. Even more tellingly, when President Trump made his speech to the Knesset in October, he divulged the extent to which he personally, and his admin, are attached to Israeli interests:

“Miriam and Sheldon would come into the office. They’d call me, he’d call me. I, I think he, I think they had more trips to the White House than anybody else I can think of. Look at her, sitting there so innocently. She’s got 60 billion in the bank. 60 billion.”

Zionist billionaire Ron Lauder later confirmed this, noting as the leader of the World Jewish Congress that Sheldon Adelson was a “one-man State Department”…”not only in Trump’s time, but in Biden’s time, and all the other times.”

However, as Trump’s megadonors, the Adelsons, alongside Lauder, are just a minor part of this influence network. Larry Ellison overlaps with the same social, political and donor interests, just as does Alex Karp, the CEO of Palantir.

In fact, it would be difficult to find a single part of Trump’s administration that is not so aligned: from the State Secretary Marco Rubio, with Steve Witkoff as the actual policymaker, to the Secretary of Commerce Howard Lutnick.

Ellison-led acquisition of both TikTok and CBS News, through its parent Paramount Global should be understood in this light. On Monday, Ellison also launched a bid against Netflix to take over Warner Bros. Discovery (WBD).

This consolidation spree is paramount, pun intended, to understanding Oracle’s trajectory and perceived growth. With unparalleled access and influence, as the specialized tech branch of the world’s most powerful network, Oracle is highly likely to be favored for massive government and defense contracts, in particular through its Oracle Defense Ecosystem launched in June.

Irrespective of Trump’s mandate and the midterms, this favoritism is likely to carry into the Democrat presidency as well. Accordingly, the non-cancelable RPO growth of $523 billion is a direct reflection of a deep-seated public-private partnership (PPO), be it formalized or not.

To put it differently, this dynamic de-risks Oracle’s long-term revenue outlook, granting it non-market-based competitive advantage.

More By This Author: