Stocks got a jolt earlier this week, as President Trump announced that up to $500 billion will be invested in the years ahead to build up AI infrastructure in the United States. Several companies are part of that initiative, which will allow the U.S. to maintain its global lead.
CEOs of several major tech companies made the announcement with Trump at the White House, including Sam Altman, CEO of OpenAI, which kicked off the AI revolution.
The most likely winner on this buildout, however, will likely be database giant Oracle (ORCL). Oracle has shifted in recent years towards database services, which plays out well for the buildout of data centers that will be needed for next-generation AI programs.
Oracle shares jumped on the news, adding to last year’s 50% gains. However, the real returns will likely be in the quarters and even years ahead for patient investors.
Meanwhile, Oracle trades at 28 times forward earnings, but increased growth from the AI database rollout should substantially grow earnings in the years ahead.
Action to take: Oracle is a long-term buy. Investors may want to buy some shares now, and use market pullbacks to add to that position. At current prices, Oracle pays a modest 0.8% dividend.
For traders, the July $210 calls, last trading for about $9.95, could see mid-to-high double-digit returns on a further push higher from here.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.