Oracle is experiencing its best year since the dot-com boom, with shares surging 75% since January 2024, propelling the enterprise computing giant’s market value from below $165 billion to over $500 billion. The stock has climbed from approximately $60 in late 2022 to around $180, making Oracle nearly as valuable as Exxon Mobil ($518 billion) and surpassing tech giants like Netflix ($379 billion) and retail powerhouse Costco ($431 billion).
The AI boom is driving Oracle’s remarkable performance. Companies training large language models (LLMs) are paying premium prices for the processing power and cloud infrastructure that Oracle provides. The company signed the largest sales contracts in its history last year, tapping into what CEO Safra Catz described as “enormous demand” for training LLMs. Notable clients include OpenAI and its flagship ChatGPT model, which catalyzed the current AI revolution.
Oracle’s financial performance reflects this AI-driven growth trajectory. Net income jumped 23% to $10.5 billion in the fiscal year ended May 2024, fueled by 12% sales growth in the cloud services and license support division, which generated nearly 75% of total revenues. CEO Safra Catz predicted revenue growth would accelerate from 6% to double digits in the current financial year, signaling continued momentum.
Strategic partnerships are amplifying Oracle’s cloud ambitions. The company is collaborating with Microsoft and Google to interconnect their respective cloud platforms. Cofounder and CTO Larry Ellison stated this integration would “turbocharge our cloud database growth,” positioning Oracle to compete more effectively against established cloud leaders.
Larry Ellison’s personal wealth has skyrocketed alongside Oracle’s stock performance. His 40%+ stake in the company has elevated his net worth to $227 billion, making him the second-richest person globally according to Forbes, trailing only Tesla CEO Elon Musk’s $330 billion. While Oracle has operated somewhat under the radar compared to Nvidia—whose stock tripled in the past year—the company is still headed for its best annual stock performance in 25 years, with executives promising continued growth ahead.
Key Quotes
enormous demand
CEO Safra Catz used this phrase to describe the market conditions for training large language models that led Oracle to sign the largest sales contracts in its history. This characterization emphasizes the unprecedented scale of AI infrastructure needs driving Oracle’s growth.
turbocharge our cloud database growth
Larry Ellison, Oracle’s cofounder and CTO, made this statement regarding the company’s partnerships with Microsoft and Google to interconnect their cloud platforms. The comment signals Oracle’s aggressive strategy to compete with established cloud leaders by emphasizing interoperability and integration.
Our Take
Oracle’s resurgence reveals a crucial insight about the AI revolution: infrastructure providers may ultimately capture more sustainable value than application developers. While AI models grab headlines, the companies providing the computational backbone—cloud services, databases, and processing power—are building recurring revenue streams with high switching costs. Oracle’s 25-year stock performance record isn’t just about riding the AI wave; it reflects a fundamental repositioning from legacy enterprise software to essential AI infrastructure. The company’s ability to secure OpenAI as a client while simultaneously partnering with Microsoft and Google demonstrates strategic agility. As AI workloads become more distributed and complex, Oracle’s database expertise and multi-cloud approach could prove more defensible than pure-play cloud providers. The real test will be whether Oracle can maintain this momentum as hyperscalers like AWS, Azure, and Google Cloud invest billions in their own AI infrastructure capabilities.
Why This Matters
Oracle’s dramatic stock surge represents a critical shift in the AI infrastructure landscape, demonstrating that the AI boom extends far beyond chipmakers like Nvidia to encompass the entire cloud computing ecosystem. As companies race to develop and deploy large language models, the demand for robust cloud infrastructure and database solutions has become paramount, creating massive opportunities for established enterprise technology providers.
This story highlights the democratization of AI investment opportunities beyond the obvious players. While Nvidia has captured headlines with its GPU dominance, Oracle’s success shows that traditional enterprise software companies with cloud capabilities are equally positioned to capitalize on AI’s explosive growth. The company’s partnerships with Microsoft and Google signal an industry-wide recognition that interconnected, flexible cloud infrastructure will be essential for the next phase of AI development.
For businesses and investors, Oracle’s performance underscores the long-term value of AI infrastructure investments. The company’s ability to secure contracts with OpenAI and other leading AI developers validates its technology stack and suggests sustained revenue growth as AI adoption accelerates across industries. This matters for the broader economy as it indicates AI’s transformation from experimental technology to mission-critical business infrastructure.
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Source: https://www.businessinsider.com/oracle-stock-price-ai-tech-larry-ellison-cloud-nvidia-musk-2024-12