Oracle’s Larry Ellison Just Dropped a Bombshell for Nvidia Investors - Here’s Why It Matters

Oracle's tech titan Larry Ellison just handed Nvidia shareholders the kind of news that makes portfolios sing.

The AI Gold Rush Just Got Real

Ellison's latest move signals massive infrastructure expansion - exactly the kind that devours Nvidia's chips like candy. We're talking data centers hungry for GPUs, cloud services scrambling for compute power, and enterprises racing to deploy AI at scale.

Supply Meets Demand - Finally

Oracle's commitment means one thing: sustained demand for Nvidia's hardware. No more worrying about inventory gluts or cyclical slowdowns. This is enterprise-level adoption hitting critical mass.

The Cynic's Corner

Because nothing makes Wall Street happier than when billionaires spend other people's money on expensive hardware - it's like watching someone else buy the champagne while you get the bubbles.

Bottom line: When Oracle speaks, the market listens. And right now, it's screaming 'buy' for Nvidia.

Image source: Getty Images.

Nvidia's GPUs for training and inferencing

First, though, a brief summary of the Nvidia story so far and a quick look at how Oracle fits into the picture. Nvidia, as mentioned, is the AI chip giant. Its GPUs are widely used for the training and inference of large language models (LLMs), and Nvidia also sells a variety of complementary products and services. So, customers can rely on Nvidia for all their AI needs.

This has supercharged Nvidia's sales over the past few years, with revenue climbing in the double or triple digits to record levels quarter after quarter. The company is also highly profitable in sales, as evidenced by its gross margin levels. They've remained above 70%, with the exception of one quarter, when Nvidia took a charge for chips it was no longer authorized to sell to China.

The chip giant aims to stay ahead through its constant focus on innovation, and so far, this seems to be the right plan. Nvidia has seen soaring demand for its past two releases: the Blackwell architecture and chip late last year and, very recently, the release of the update, the Blackwell Ultra. Customers have demonstrated that they want to get in on the very latest Nvidia has to offer.

As for Oracle, you may know the company for its database management system, but in recent years, the company has expanded to include cloud infrastructure in its offerings -- and this has proven to be a genius move. Oracle invests in Nvidia hardware to serve its cloud customers, and this cloud business has powered revenue higher quarter after quarter.

Ellison's words about the AI market

Now, let's consider what Ellison had to say in the recent earnings call and why it's such outstanding news for Nvidia shareholders. "People are running out of inferencing capacity," Ellison said. "There's a huge amount of demand for inferencing." He even said that earlier this year, a company called to ask for any capacity anywhere in the world to use for inferencing.

Inferencing involves powering the "thinking" process that an LLM goes through to come up with answers to complex queries. It's seen as the next big stage of growth in the AI market because it's the actual application of a trained AI model to real-world needs.

Blackwell beats Hopper

Where does Nvidia come in? The company specifically designed its latest Blackwell platform for inferencing, and the updates to follow will also build on this expertise. For example, Nvidia said its Blackwell architecture is 40 times higher in speed and throughput than the previous Hopper system, resulting in lower costs for the customer and better response quality.

Oracle's observation of this need for inferencing – and in some cases, companies not easily finding enough to meet their needs -- suggests demand will remain strong for Nvidia's latest GPUs and the ones to come. As mentioned, inferencing is needed as AI is put to use. It's not a start-and-finish job but an ongoing process as AI is applied to real-world uses and problems.

This is fantastic news for Nvidia shareholders, as it means the company is well positioned to continue delivering major growth over the long term -- and that could help the stock explode higher.