Well..The Oracle was there all the time...She "surfaces" at the end to give Neo the final msg: "Everything that has a beginning has an end, Neo"
Smith was so obsessed in killing Neo that he can't see past his own choice: 1 + -1 = 0
he couldve also been laughing due to the fact that he knows that neo is the only one that stands in his way. smith may not have seen neo in the crater, but realized that he has just taken over the one person who was been helping the rebels the entire time....one more giant step towards freedom.
*some people say, "Hey, Neo is JUST like Jesus" but i say "Nay, Neo can kick Jesus' ass!"*
-Coming Easter 2004-
Neo -vs- Jesus
The Oracle didn't know how it would end (as stated in the movie). Therefore, Smith couldn't see who would win.
__________________ "The MTV Movie Awards are a systemic anomaly inherent to the programming of the Matrix. Although the transport process has altered your consciousness, you irrevocably remain human. Ergo, concordantly, vis-a-vis... You know what? I have no idea what the hell I'm saying. I just thought it would make me sound cool."
-The Architect AKA Larry