A New Player? Oracle’s Growth Hints at Trillion-Dollar Valuation by 2032

Riding the AI wave, major tech corporations like Microsoft, Apple, and Google—already trillion-dollar giants—anticipate significant success. They are expanding their data centres, enhancing research and development, and boosting cloud services. Oracle is also on this trajectory, with its impressive growth in AI suggesting it may soon join its peers in the trillion-dollar club. 

Larry Ellison, Oracle’s board chair and CTO, recently told CNBC that the company is building some of the largest data centres in the world. He noted that some facilities will use nearly a gigawatt of power, comparable to a large city’s energy needs or a massive AI cloud training operation.

Oracle’s Earnings and Market Cap

With its market capitalization below $400 billion, a projection of $1 trillion for Oracle seems quite far-fetched. Nonetheless, the company has rapidly expanded its cloud and enterprise database software, establishing a decent foothold in today’s market. Oracle now serves 98% of the global Fortune 500 companies, most actively investing in generative AI, highlighting its broad base market holdings and the heightened demand for its IT expertise. 

In its last fiscal 2024 quarter, ending May 31, Oracle‘s operating income spiked by 15%, with its cumulative quarterly revenue increasing by 3% year over year. The firm also closed a significant number of contacts in the same quarter, more than 30 of which were AI-related, bringing home over $12 billion. Moreover, the fiscal Q4 earnings contributed immensely to Oracle’s RPO rise. The firm’s RPO grew to nearly $100 billion, culminating in a 44% year-over-year rise, revealing commendable and expedited growth.

Future Projections

Larry Ellison, Oracle’s CTO, anticipates the company’s bolstered database growth due to the escalated demand for generative AI. Oracle’s expectations for augmented revenues shortly align with Wall Street analysts as they peg the corporation to churn out nearly $58 billion in its fiscal 2025, amounting to a P/S ratio of about 7. 

If Oracle maintains this P/S ratio, it would need to increase its annual revenue to approximately 148 billion to reach a market capitalization of 1 trillion. 

Oracle already experienced an impressive 11% year-over-year revenue growth in its recently concluded quarter. If the company maintains this growth rate, it would take roughly ten years to reach the trillion-dollar mark. However, with expectations for revenue growth to accelerate to 15% in the upcoming fiscal year, Oracle could get a $1 trillion market cap by 2032 if it sustains this rate. This improved growth outlook could shorten the timeline by a couple of years.