Oracle’s blockbuster surge shows AI trade’s growing influence on market

Sept 11 (Reuters) – Wall Street’s AI trade has powered the stock market to record highs in 2025, and Oracle’s latest surge is giving investors fresh momentum to double down on artificial intelligence bets.

Oracle’s shares (ORCL) jumped 36% on Wednesday, lifting its market value to $922 billion and leapfrogging giants like Eli Lilly, JPMorgan Chase, and Walmart. The gains came after the company revealed a massive uptick in demand for its AI-driven cloud services, further solidifying its position in the red-hot AI sector.

This year, Oracle, Broadcom, Palantir, and other AI-focused tech firms have dominated market performance, even as Apple and Tesla—once leaders of the so-called “Magnificent Seven”—struggled to keep pace.

“When people worried AI growth might slow down, Oracle surprised everyone with huge numbers that reignited confidence in the AI trade,” said Peter Tuz, president of Chase Investment Counsel.

Meanwhile, Nvidia (NVDA)—the poster child of the AI boom—remains the world’s most valuable company with a market cap of $4.3 trillion, despite a 2% dip after its recent earnings forecast.

Oracle’s surge follows the announcement of four multi-billion-dollar AI infrastructure contracts, capitalizing on an industry-wide race led by firms like OpenAI and xAI to secure massive computing power for generative AI.

The AI rally is now reshaping the S&P 500: the eight most valuable AI-related firms—including Oracle, Nvidia, Microsoft, Alphabet, Amazon, Broadcom, Meta, and Palantir—make up nearly 30% of the index and account for half of its 11% gains in 2025, according to LSEG data.

The excitement has spread beyond tech. Utilities and industrial firms like GE Vernova, Constellation Energy, and Vistra are also benefiting, as AI growth fuels unprecedented energy demand.

However, the boom has pushed valuations above historical levels. The S&P 500 is trading at 22x forward earnings, well above the 10-year average of 18.6, while the tech sector’s multiple has risen to 28x vs. its 10-year average of 22.

Despite concerns of overheating, investors remain bullish. Oracle’s year-to-date performance nearly doubled after Wednesday’s jump, while Palantir shares are up 120% and Broadcom up nearly 60%.

“The size of Oracle’s surge shows there’s still huge money flowing into AI,” said Chuck Carlson, CEO of Horizon Investment Services.

With AI at the center of nearly every market conversation, Oracle’s explosive growth is yet another sign that the AI trade remains the driving force behind Wall Street’s record-setting rally in 2025.