Oracle Corp. shares surged 10.42% on Monday, extending their rebound as ramped-up capital expenditures by major technology companies helped ease concerns about artificial intelligence's impact on software demand. The rally came as Amazon, Alphabet, Meta, and Microsoft are expected to spend approximately $650 billion on AI tools this year, with analysts betting some of that spending will flow to software providers like Oracle.

Worries that AI would cannibalize traditional software have battered the sector, with the IShares Expanded Tech-Software Sector ETF down 28% from its highs. However, D.A. Davidson analyst Gil Luria upgraded Oracle to buy from neutral, arguing that software remains essential and won't be replaced by AI-generated code. Luria also expressed increased optimism about Oracle's relationship with OpenAI, citing strategic changes and competitive pressure on Google's rivals.

Despite the positive sentiment, not all analysts are convinced. Melius Research's Ben Reitzes noted Oracle's cash generation challenges and uncertainty about OpenAI's ability to outperform competitors like Anthropic and Google. Oracle nonetheless plans to raise $45 billion to $50 billion this year to expand cloud capacity for major customers including Advanced Micro Devices, Meta, and Nvidia.

Quick Fact: Oracle shares rose 10.42% on Monday amid broader tech sector gains.