AI hardware demand is booming, with global spending projected to escalate from $337 billion this year to $749 billion by 2028. Oracle and Dell Technologies are key players, though both faced stock pressures in 2025. Oracle is leveraging its cloud infrastructure and significant revenue growth, while Dell focuses on the burgeoning AI server market. Ultimately, Oracle seems the stronger buy as it navigates this growth landscape more effectively.
The demand for artificial intelligence (AI) hardware has surged exponentially as companies and governments invest billions to enhance productivity through powerful large language models (LLMs). Market research indicates that global AI spending is set to reach $337 billion this year, and project to swell to $749 billion by 2028. This financial boom especially benefits tech giants like Oracle and Dell Technologies, both of which are experiencing pressure on their stock prices despite the escalating demand for AI infrastructure.
Oracle, recognized for its database management software, seizes the growth opportunities presented by AI. The company’s cloud infrastructure, crucial for AI model applications, is seeing skyrocketing demand that currently outstrips its capacity. In its latest fiscal quarter, Oracle’s cloud revenue surged 51% year over year, accounting for 19% of its total revenue, up nearly six percentage points. At the same time, Oracle’s remaining performance obligations (RPO) rose significantly, reflecting stronger demand for its services.
To meet this burgeoning demand, Oracle is ramping up its cloud capacity, anticipating a doubling of its available power by year’s end and a tripling by the next fiscal year. This scaling is strategic, as the cloud infrastructure market is projected to reach $580 billion by 2030. With Oracle expecting a 15% revenue growth next year, buoyed by initiatives like the $500 billion Stargate Project, the company is well-positioned for sustained future expansion.
In contrast, Dell Technologies thrives on the AI server market, leveraging its position as the largest server provider. The demand for AI servers is expected to explode, potentially boosting revenue to $838 billion annually by 2030. Dell’s infrastructure business reports a dramatic 29% revenue growth, with a current target for a 50% rise amidst a robust AI server backlog worth $9 billion following a significant contract with xAI.
Despite Dell’s promising outlook, analysts predict only an 8% revenue increase for the current fiscal year, mirroring the previous year. The company’s potential resides not just in AI servers but also in the growing segment of AI PCs. While Dell’s future may brighten alongside improvements in PC sales, it faces challenges before it can fully realize its growth potential.
Ultimately, Oracle appears to be the more advantageous investment due to its accelerating growth driven by substantial revenue streams. Though Dell’s value is appealing, Oracle’s robust sales pipeline indicates more consistent growth potential. With Oracle’s valuation remaining reasonable compared to industry benchmarks, investors looking to capitalize on AI technology developments will find Oracle to be a compelling choice.
In the escalating AI market, Oracle’s strategic growth and significant backlog present substantial revenue opportunities, distinguishing it from Dell. While both companies showcase promising facets which could lead to growth, Oracle’s proactive measures to expand its infrastructure and accelerate revenue stand out. Thus, for investors keen on harnessing the potential of AI, Oracle emerges as the more reliable horse in this race.
Original Source: www.fool.com
