After Oracle’s (ORCL) latest earnings, it has become clear that cloud and database management companies are now riding the tailwinds of the AI boom. Demand has surged for firms with additional capacity to support major hyperscalers like Alphabet (GOOGL), Microsoft (MSFT), and OpenAI. This trend is evident in Oracle’s Remaining Performance Obligations (RPO), which soared 359% in the quarter. RPO represents unbilled revenue from contracted business, essentially a forward-looking sales pipeline, and serves as a key gauge of future growth.

Oracle’s spike was driven by a handful of large customers, such as OpenAI, which signed a deal for 4.5 gigawatts of datacenter capacity, and Alphabet, which is leveraging Oracle’s excess resources to meet customer demand in its ecosystem. The takeaway: hyperscalers continue to expand aggressively, but current demand is outpacing supply, forcing them to tap external partners.

A similar trend is unfolding with Snowflake (SNOW) and MongoDB (MDB). Both companies reported strong guidance and are embedding AI tools into their ecosystems to meet enterprise and hyperscaler needs. This shift comes just as hardware leaders like Nvidia (NVDA) and AMD (AMD) see their stocks stall after extraordinary runs. On the semiconductor fabrication front, suppliers that provide the equipment to develop chips are slowing, weighed down further by tariff policy headwinds.

This all suggests the AI cycle is moving through the system. Hardware companies were the first beneficiaries, but momentum is now shifting toward cloud providers and firms with spare datacenter capacity. The next logical question: when will pure software players capture the market’s attention? Perhaps the coming earnings season will deliver early signs of that evolution.

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