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A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.

The Iran war has propelled oil prices to above $94 a barrel, up about 30% since the conflict began in late February. That rally has been a boon for investment firms of ultra-wealthy families who made opportunistic bets on oil in recent years. 

Since the pandemic, private equity funds and other institutional investors have backed away from oil and gas in part due to pressure from environmentally conscious stakeholders. Family offices have stepped in to fill some of that void, investors and advisors told CNBC.

While many family offices are environmentally minded — with a September survey by Citi Private Bank showing more than half of respondents reporting they were likely to make sustainable investments in the next five years — they’re not subject to the same ESG mandates as private equity firms or endowments, which have faced pressure to divest from oil and gas.

“Family offices are contrarian players. A lot of investors left the sector for non-fundamental reasons, like endowment funds, who had students protesting,” said Keith Behrens, head of energy and clean energy investment banking at Stephens. “Family offices saw that flight of capital, and it created really good investment opportunities for them. They were able to come in and invest with pretty reasonable cash flow multiples.”

Family offices also have an edge on private equity players as they generally hold investments for longer periods, meaning they can weather oil price fluctuations and dealmaking downturns, according to Gillon Capital’s Jeff Peterson.

“We back teams who are looking to build businesses over the long term, because that’s where we really differentiate ourselves. A fund can only really hold a business for their fund life,” he said. “We invest for generations in mind so we can look through current cycles.”

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Peterson has managed investments for the descendants of oil tycoon H.L. Hunt for 14 years. About five years ago, A.G. Hill Partners, one of the family’s personal investment firms, doubled down on oil and gas to take advantage of attractive valuations. 

Multiples for the sector typically range between two to three times cash flow, according to Peterson, who is now chief investment officer for Gillon Capital, a family office spun out of A.G. Hill Partners a year ago.

Peterson said the family has taken the lead on major deals in the sector, such as forming a consortium of family offices and a few PE funds for the $2 billion acquisition of natural gas producer PureWest Energy. The family is also an anchor investor in a minerals and royalty fund that has raised about $500 million in capital and has a substantial position in the Permian Basin, which is the highest-producing oil field in the U.S., he said.

The sector is increasingly drawing interest from family offices without ties to energy, according to Tailwater Capital’s Doug Prieto. He leads upstream energy funds, which back oil and gas exploration and production, for the middle-market PE firm. Prieto said the funds have raised about $500 million from family offices without backgrounds in energy and just last week took a commitment from a family office built from an options-trading fortune. 

Family offices without energy expertise are typically seeking to diversify their portfolio with assets that are uncorrelated to stocks and bonds, Prieto said. Oil and gas are also attractive as inflation hedges, he added.

The Trump administration’s efforts to prioritize oil, gas and nuclear power over clean energy have given investors more confidence in the sector, according to Ellen Conley, lawyer and co-chair of Haynes Boone’s energy finance practice group.

Plus, the potential for cash dividends appeals to family offices, she said.

“Family offices are viewing these assets as cash-flowing real assets rather than a speculative commodity gamble,” she said. “We’re dealing with real assets, particularly in Texas, where you have this repeatable cash flow and predictive models.”

Conley said investors’ interest in energy was already on the rise before the recent oil surge. But headlines about oil prices tied to the Iran war have spurred queries from family offices looking to invest, according to Vicki Odette, global chair of Haynes Boone’s investment management practice group.

However, investors who are new to the space can only realistically take advantage of the current price surge by hedging, Peterson said. 

“For anybody to start a drilling program today, you’re really not looking at production this calendar year. You’re looking at next year,” said Peterson. 

Analysts generally expect the current spike to be temporary.

And while high prices are good for existing investors, they make it harder to get deals done, according to Behrens.

“If someone’s selling a property, they’re going to want to sell it at the highest price possible and get the latest day close,” he said. “The buyer is going to say, ‘Hey, that’s great that oil is at $115 a barrel, but three months ago it was at $60.'”

Prieto added that it is possible to have too much of a good thing. High oil prices for a prolonged period of time poses a recession risk, he said. 

“We like to see a robust U.S. economy. I think for us, somewhere between $75 and $85 a barrel feels pretty darn good,” he said. “When you get over $100, you start to have adverse impacts that don’t benefit anyone.”

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A Tesla Cybertruck is parked outside of a dealership on November 14, 2024 in Austin, Texas.

Brandon Bell | Getty Images

Tesla shares sank more than 8% on Wednesday, notching their steepest drop since before Donald Trump’s election victory last month, which sparked a sharp rally in the stock.

Tesla closed at $440.13, and is still up 75% since Election Day on Nov. 5. Last week, the stock climbed to a record, surpassing its prior high reached in 2021. Ahead of Wednesday’s drop, it had continued going up, closing at a high of $479.86 on Tuesday.

“Most investors we speak to have been stunned by the magnitude of the rally, and are increasingly confused on how to handle the stock given how widely disconnected it appears to be from fundamentals,” analysts at Barclays wrote in a report on Wednesday. They have the equivalent of a hold rating on the stock and a $270 price target.

The pullback coincided with a steep drop in the broader market, including a 3.6% plunge in the Nasdaq, the second-worst day of the year for the tech-heavy index.

Tesla is coming off a 38% rally in November, its best monthly performance since January 2023 and its 10th best on record. CEO Elon Musk was a major Trump backer, pouring in $277 million primarily into his campaign effort, according to Federal Election Commission filings.

Now Musk, the world’s richest person, is set to to lead the Trump administration’s “Department of Government Efficiency,” which is expected to function as an advisory office, alongside onetime Republican presidential candidate Vivek Ramaswamy.

His new role could give Musk, who also runs SpaceX and owns social media company X, influence over federal agencies’ budgets, staffing and the ability to push for the elimination of inconvenient regulations. Musk said during a Tesla earnings call in October that he intended to use his sway with Trump to establish a “federal approval process for autonomous vehicles.”

While Tesla still doesn’t produce robotaxis or operate driverless ride-hailing services, its major domestic competitor Waymo on Wednesday said it conducted over 4 million paid robotaxi trips in 2024 as it scaled its commercial operations in the U.S.

“Tesla is the only Elon Musk company that is publicly traded and it has often served as a proxy for an investment in Musk himself,” the Barclays analysts wrote. “This value has understandably increased, but this further exacerbates the already-high key man risk in Tesla stock, in our view.”

On Wednesday, a Quinnipiac poll found 53% of voters in the U.S. do not approve of Musk “playing a prominent role in the Trump administration.” The split was massive across party and gender lines — only 31% of women surveyed said they approved of Musk taking a big role in the next administration, and only 5% of Democrats approved.

Musk has also complained in recent days that the SEC has issued a “settlement demand” tied to his sale of Tesla shares in 2022 as he was pursuing the purchase of Twitter, now known as X.

A spokesperson for the SEC declined to discuss the matter, telling CNBC that the agency conducts probes “on a confidential basis to preserve the integrity of its investigative process.”

Tesla is due to report its fourth-quarter and year-end vehicle deliveries in January. Without a major new vehicle added to its lineup since Cybertruck deliveries began in November 2023, Tesla has been working to drive sales of its EVs with an array of incentives, like 0% financing.

WATCH: Analyst explains why Tesla’s momentum remains unstoppable

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Larry Ellison and Monica Seles and Bill Gates (back row) watch Carlos Alcaraz of Spain play against Alexander Zverev of Germany in their Quarterfinal match during the BNP Paribas Open in Indian Wells, California, on March 14, 2024.

Clive Brunskill | Getty Images

It’s been a good year for Larry Ellison.

Oracle’s co-founder has gained roughly $75 billion in paper wealth as the software company he started in 1979 enjoyed its biggest stock rally since 1999 and the dot-com boom.

While the S&P 500 index has gained 27% in 2024, Oracle shares have shot up 63%, lifting Ellison’s net worth to more than $217 billion, according to Forbes, behind only Tesla CEO Elon Musk and Amazon founder Jeff Bezos among the world’s richest people.

At 80, Ellison is a senior citizen in the tech industry, where his fellow billionaire founders are generally decades younger. Meta CEO Mark Zuckerberg, whose net worth has also ballooned past $200 billion, is half his age.

But Ellison has found the fountain of youth both personally and professionally. After being divorced several times, Ellison was reported this month to be involved with a 33-year-old woman. And at a meeting with analysts in Las Vegas in September, Ellison was as engaged as ever, mentioning offhand that the night before, he and his son were having dinner with his good friend Musk, who’s advising President-elect Donald Trump (then the Republican nominee) while running Tesla and his other ventures.

His big financial boon has come from Oracle, which has maneuvered its way into the artificial intelligence craze with its cloud infrastructure technology and has made its databases more accessible.

ChatGPT creator OpenAI said in June that it will use Oracle’s cloud infrastructure. Earlier this month, Oracle said it had also picked up business from Meta.

Startups, which often opt for market leader Amazon Web Services when picking a cloud, have been engaging Oracle as well. Last year, video generation startup Genmo set up a system to train an AI model with Nvidia graphics processing units, or GPUs, in Oracle’s cloud, CEO Paras Jain said. Genmo now relies on the Oracle cloud to produce videos based on the prompts that users type in on its website.

“Oracle produced a different product than what you can get elsewhere with GPU computing,” Jain said. The company offers “bare metal” computers that can sometimes yield better performance than architectures that employ server virtualization, he said.

In its latest earnings report earlier this month, Oracle came up short of analysts’ estimates and issued a forecast that was also weaker than Wall Street was expecting. The next day, the stock fell 7% in the worst performance of the year, eating into the gains for 2024.

Still, Ellison was bullish for the future.

“Oracle Cloud Infrastructure trains several of the world’s most important generative AI models because we are faster and less expensive than other clouds,” Ellison said in the earnings release.

For the current fiscal year, which ends in May, Oracle is expected to record revenue growth of about 10%, which would mark its second-strongest year of expansion since 2011.

Jain said that when Genmo has challenges, he communicates with Oracle sales executives and engineers through a Slack channel. The collaboration has resulted in better reliability and performance, he said. Jain said Oracle worked with Genmo to ensure that developers could launch the startup’s Mochi open-source video generator on Oracle’s cloud hardware with a single click.

“Oracle was also more price-competitive than these large hyperscalers,” Jain said.

‘That’s going to be so easy’

Three months before its December earnings report, at the analyst event in Las Vegas, Oracle had given a rosy outlook for the next three years. Executive Vice President Doug Kehring declared that the company would produce more than $66 billion in revenue in the 2026 fiscal year, and over $104 billion in fiscal 2029. The numbers suggested acceleration, with a compound annual growth rate of over 16%, compared with 9% in the latest quarter.

After Kehring and CEO Safra Catz spoke, it was Ellison’s turn. The company’s chairman, technology chief and top shareholder strutted onto the stage in a black sweater and jeans, waved to the analysts, licked his lips and sat down. For the next 74 minutes, he answered questions from seven analysts.

“Did — did he say $104 billion?” Ellison said, referring to Kehring’s projection. Some in the crowd giggled. “That’s going to be so easy. It is kind of crazy.”

Oracle’s revenue in fiscal 2023 was just shy of $50 billion.

The new target impressed Eric Lynch, managing director of Scharf Investments, which held $167 million in Oracle shares at the end of September.

“For a company doing single digits for a decade or so, that’s unbelievable,” Lynch told CNBC in an interview.

Oracle co-founder and Chairman Larry Ellison delivers a keynote address during the Oracle OpenWorld on October 22, 2018 in San Francisco, California. 

Justin Sullivan | Getty Images

Oracle is still far behind in cloud infrastructure. In 2023, Amazon controlled 39% of the market, followed by Microsoft at 23% and Google at 8.2%, according to industry researcher Gartner. That left Oracle with 1.4%.

But in database software, Oracle remains a stalwart. Gartner estimated that the company had 17% market share in database management systems in 2023.

Ellison’s challenge is to find opportunities for expansion.

Last year, he visited Microsoft headquarters in Redmond, Washington, for the first time to announce a partnership that would enable organizations to use Oracle’s database through Microsoft’s Azure cloud. Microsoft even installed Oracle hardware in its data centers.

In June, Oracle rolled out a similar announcement with Google. Then, in September, Oracle finally partnered with Amazon, introducing its database on AWS.

Oracle and Amazon had exchanged barbs for years. AWS introduced a database called Aurora in 2014, and Amazon worked hard to move itself off Oracle. Following a CNBC report on the effort, Ellison expressed doubt about Amazon’s ability to reach its goal. But the project succeeded.

In 2019, Amazon published a blog post titled, “Migration Complete – Amazon’s Consumer Business Just Turned off its Final Oracle Database.”

Friendlier vibe

Ellison looked back on the history between the two companies at the analyst meeting in September.

“I got kind of got cute commenting about Amazon uses Oracle, doesn’t use AWS, blah, blah,” he said. “And that hurt some people’s feelings. I probably shouldn’t have said it.”

He said a friend at a major New York bank had asked him to make sure the Oracle database works on AWS.

“I said, ‘Great. It makes sense to me,'” Ellison said.

The multi-cloud strategy should deliver gains in database market share, said analyst Siti Panigrahi of Mizuho, which has the equivalent of a buy rating on Oracle shares. Cloud deals related to AI will also help Oracle deliver on its promise for faster revenue growth, he said.

“Oracle right now has an end-to-end stack for enterprises to build their AI strategy,” said Panigrahi, who worked on applications at Oracle in the 2000s.

So far, Oracle has been mainly cutting high-value AI deals with the likes of OpenAI and Musk’s X.ai. Of Oracle’s $97 billion in remaining performance obligations, or revenue that hasn’t yet been recognized, 40% or 50% of it is tied to renting out GPUs, Panigrahi said.

Oracle didn’t respond to a request for comment.

Panigrahi predicts that a wider swath of enterprises will begin adopting AI, which will be a boon to Oracle given its hundreds of thousands of big customers.

There’s also promise in Oracle Health, the segment that came out of the company’s $28.2 billion acquisition of electronic health record software vendor Cerner in 2022.

Yoshiki Hayashi, Marc Benioff and Larry Ellison attend the Transformative Medicine of USC: Rebels with a Cause Gala in Santa Monica, California, on Oct. 24, 2019.

Joshua Blanchard | Getty Images

Unlike rival Epic, Oracle Health lost U.S. market share in 2023, according to estimates from KLAS Research. But Ellison’s connection to Musk, who is set to co-lead Trump’s Department of Government Efficiency, might benefit Oracle Health “if there is a bigger push towards modernizing existing healthcare systems,” analysts at Evercore said in a note last week. They recommend buying the stock.

For now, Oracle is busy using AI to rewrite Cerner’s entire code base, Ellison said at the analyst event.

“This is another pillar for growth,” he said. “I think you haven’t quite seen it yet.”

Hours earlier, Ellison had put in a call to Marc Benioff, co-founder and CEO of Salesforce. Benioff knows Ellison as well as anyone, having worked for him for 13 years before starting the cloud software company that’s now a big competitor.

“It was awesome,” Benioff said in a wide-ranging interview the next day, regarding his chat with Ellison.

Benioff spoke about his former boss’s latest run of fortune.

“Larry really deeply wants this,” Benioff said. “This is very important to him, that he is building a great company, what he believes is one of the most important companies in the world, and also, wealth is very important to him.”

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