Oracle, a tech giant known for its database and enterprise software, is on a mission to reach the coveted $1 trillion market cap club by 2030. With its strong fundamentals, aggressive growth strategy, and potential for continued innovation, could Oracle join the ranks of Nvidia, Apple, and other trillion-dollar behemoths? Discover the factors driving Oracle’s ambitious goals and assess its potential to become an unstoppable force in the tech landscape.

  • Six U.S. companies are currently worth $1 trillion or more.
  • Oracle might be set to join that exclusive club as demand soars for its artificial intelligence (AI) data center infrastructure.
  • Oracle signed $12.5 billion in new AI deals in the recent quarter alone, including with ChatGPT creator OpenAI.
Oracle Stock: Could Join Nvidia, Apple, and Others in the alt=
Credit The Motley Fool

Oracle Corporation (ORCL -1.23%) is experiencing unprecedented demand for its artificial intelligence (AI) infrastructure, propelling its stock to new heights. As the company builds its cloud infrastructure to cater to AI developers, it stands poised to join the ranks of trillion-dollar companies like Apple, Microsoft, and Nvidia by the end of this decade.

Key Developments of Oracle

  1. AI Infrastructure Boom: Oracle’s Cloud Infrastructure (OCI) is becoming a top choice for AI developers, thanks to its advanced GPU technology and unique RDMA (random direct memory access) that significantly accelerates data transfer speeds. This technology allows AI models to train faster, offering substantial cost savings.
  2. High Demand and Revenue Growth: Despite overall revenue growth of just 3% in the fourth quarter of fiscal 2024, OCI revenue surged by 42% year-over-year, reaching $2 billion. Oracle’s total remaining performance obligations (RPOs) hit a record $98 billion, up 44%, indicating a strong backlog of orders, including $12.5 billion in new AI deals.
  3. Strategic Partnerships: Oracle’s infrastructure is utilized by major AI startups such as Cohere and xAI, as well as tech giants like Microsoft, Alphabet, and Nvidia. A recent partnership with ChatGPT creator OpenAI further solidifies Oracle’s position in the AI market.

Oracle Financial Outlook

Oracle’s stock currently trades at a price-to-earnings (P/E) ratio of 25, lower than the Nasdaq-100 index average of 30.9. If Oracle’s P/E ratio aligns with the Nasdaq-100, its market capitalization could rise to $473 billion. To reach a $1 trillion market cap by 2030, Oracle’s earnings per share (EPS) would need to grow by 11.3% annually, from $5.56 in fiscal 2024 to $11.76.

While Oracle’s earnings grew by 8.6% in fiscal 2024, this was partly due to capacity constraints. As Oracle expands its data centers, revenue and earnings are expected to accelerate, with Wall Street forecasting an 11.3% earnings growth for fiscal 2025.

Oracle’s strategic investments in AI infrastructure and strong demand position it for substantial long-term growth. Even if it doesn’t achieve a $1 trillion market cap by 2030, the company is well on its way to becoming a dominant player in the AI sector.