From left, President Donald Trump, Oracle’s Larry Ellison, SoftBank’s Masayoshi Son and OpenAI’s Sam Altman appear at the White House in Washington on Jan. 21, 2025.
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The Department of Defense has awarded Oracle a significant contract, valued at nearly $7 billion over the next decade, a move that offers a much-needed boost to the enterprise software giant that has seen its stock performance falter this year. The news sent Oracle’s shares up approximately 3% in after-hours trading.
This expansive agreement will see Oracle software deployed across on-premises data centers supporting various branches of the military, the U.S. intelligence community, and the Coast Guard. The Central Intelligence Agency was reportedly Oracle’s inaugural client for such services. The initial five-year term of the contract encompasses perpetual and subscription-based software licenses, along with crucial maintenance and consulting services, as detailed in official contract filings.
Kirsten Davies, the Department of Defense’s Chief Information Officer, highlighted the fiscal prudence of the deal, stating that the agency anticipates savings of at least $441 million for taxpayers by “fundamentally improving how we procure on-premises Oracle capabilities.” This efficiency gain comes at a time when government spending is under intense scrutiny, especially following recent estimates by Defense Secretary Pete Hegseth that the ongoing conflict in Iran, which commenced in February, has already cost the U.S. an estimated $37.5 billion.
The close relationship between Oracle co-founder Larry Ellison and the political landscape is well-documented. Ellison has been a notable supporter of former President Donald Trump, reportedly contributing $45 million to a non-profit organization dedicated to supporting Trump’s 2024 presidential campaign. Ellison was also among the initial high-profile guests to visit the White House during Trump’s second term, a period during which plans for Oracle’s “Stargate” artificial intelligence data centers in the United States were unveiled. Trump had previously expressed support for Oracle’s potential stake in TikTok’s U.S. operations, and in May, the Department of Defense announced strategic agreements with Oracle and other technology firms concerning the integration of AI capabilities within classified networks.
Despite this governmental endorsement, Oracle’s stock has experienced a significant downturn, shedding 38% of its value year-to-date. Investors have grown increasingly apprehensive about the disruptive potential of artificial intelligence, which they fear could undermine the growth trajectories of established software vendors. Furthermore, Oracle is undertaking substantial capital expenditures, amassing tens of billions of dollars in debt to finance the construction and expansion of its AI-focused data center infrastructure.
In its latest quarterly report, Oracle disclosed a 2% year-over-year decline in software revenue. However, the company’s robust database software continues to be a foundational element for numerous large enterprises. Simultaneously, Oracle’s cloud revenue surged by an impressive 47%, underscoring its aggressive push to provide the substantial computing power required for AI applications, serving key clients such as OpenAI and others.
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