Decades of information technology (IT) and cloud systems expertise can help this artificial intelligence (AI) specialist reach new heights.
One of the biggest secular tailwinds over the past few years has been artificial intelligence (AI). To clear any lingering doubts, a quick look at the top ranked companies by market capitalization will clear any remaining doubts you may have. In fact, nearly all companies in the trillion dollar club have one thing in common. That means companies are developing, deploying, and manufacturing products at the cutting edge of AI.
apple has a long history of integrating sophisticated algorithms to give cutting-edge products an edge. Nvidia Graphics processing units (GPUs) provide the technology that enables generative AI. microsoft We worked with OpenAI to drive the evolution of ChatGPT. alphabet, Amazonand meta platform All of us are developing top-of-the-line generative AI models and bringing that technology to the masses. taiwan semiconductor manufacturing is a foundry that manufactures the majority of the most advanced chips used in AI.
With a market capitalization of just $483 billion, it may seem premature to make the nomination. oracle (ORCL 0.74%) To become a member of this prestigious fraternity. However, the company’s recent results and management’s forecasts suggest that accelerating demand for generative AI could drive further growth in the coming years.
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Oracle previously reported that 98% of Global Fortune 500 companies use some combination of its database, cloud, and enterprise software. This puts the company in a great position to help new and potential customers interested in adopting AI.
This fueled strong overall growth. Oracle’s revenue for the first quarter of 2025 (ending August 31) rose 7% year-over-year to $13.3 billion, and operating profit growth accelerated to 21%, but this is just the beginning.
Oracle continues to see a surge in new business, and CEO Safra Katz said that customers are “more excited to see how Oracle Cloud services can benefit their business.” He pointed out that there is a growing trend toward “large-scale, long-term contracts.” This trend led to an increase in the company’s remaining performance obligations (RPOs), or contracts not yet included in revenue, which rose 53% year-over-year to $99 billion. If RPO is growing faster than revenue, it indicates a solid pipeline of revenue growth and bodes well for the future.
As a result, the company expects fiscal 2025 sales to accelerate quarterly and ultimately deliver double-digit annual growth. Oracle expects revenue growth to rise to 8% in the second quarter, at the midpoint of its guidance, driven by 24% growth in cloud revenue. This is expected to increase adjusted earnings per share (EPS) by 8%.
The road to $1 trillion
Oracle has a strong track record of helping customers deploy the right cloud solutions, making their decision to join the AI revolution easier. However, this paradigm shift will take years, if not decades, to complete.
According to Wall Street, Oracle is expected to generate $58 billion in revenue in fiscal year 2025 (starting June 1), with a forward price-to-sales (P/S) ratio of 8x. At this rate, Oracle’s revenue would need to grow to about $120 billion annually to support a $1 trillion market cap. Analysts expect sales growth of about 20% for the full year and 12% thereafter. If the company can meet these benchmarks, Oracle could reach a market cap of $1 trillion by 2032.
However, management just raised its outlook and expects earnings at least 104 billion by 2029, with a compound annual growth rate (CAGR) of over 16%. If Oracle meets its internal goals, it will likely reach a market cap of $1 trillion by 2030, if not sooner.
Estimates of the impact of generative AI continue to trend upward. According to global management consulting firm McKinsey & Company, the market could be worth between $2.6 trillion and $4.4 trillion annually.
If the company can continue to serve customers looking to adopt AI, the growth rate will reflect that and Oracle will join the trillionaire ranks sooner than investors imagine.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Danny Vena has held positions at Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
