Recent developments in artificial intelligence (AI) are having a significant impact on the technology landscape, as evidenced by the market value of some of the world’s most technologically advanced companies. What many of these companies have in common is that they are AI pioneers.
Apple is currently the leader (at the time of writing), with Microsoft currently ranked second, with market capitalizations of $3.4 trillion and $3.3 trillion, respectively. NvidiaThe rise of has been breathtaking, adding nearly $2 trillion in value over the past year and climbing to $2.9 trillion to take third place. Alphabet, AmazonAnd Meta-platforms — all at the forefront of the AI revolution — have market capitalizations of $2.2 trillion, $1.9 trillion and $1.2 trillion, respectively.
With a market capitalization of just $387 billion, it may seem like a stretch to suggest that Oracle (NYSE: ORCL) could be in the running to join the $1 trillion club. However, a look at the company’s recent results and management commentary suggests that embracing generative AI could propel the company to new heights in the coming years.
A partner in AI
Oracle holds an enviable position in the AI revolution. The company provides cloud, database, and enterprise software solutions that power 98% of the world’s Fortune 500 companies. Oracle’s expertise in information technology (IT) makes it a go-to source for companies looking to adopt generative AI solutions.
That helped fuel solid overall growth. In Oracle’s fiscal 2024 fourth quarter (ended May 31), revenue of $14.3 billion rose 3% from a year earlier, while operating income jumped 15% — but that doesn’t tell the whole story.
During Oracle’s fourth-quarter earnings call, Chairman and CTO Larry Ellison noted that the company signed more than 30 AI-focused contracts worth more than $12 billion in the most recent quarter alone. That included some of the largest contracts in Oracle’s history. Ellison said he expects strong demand for generative AI to “supercharge” the company’s cloud database growth.
That, in turn, brought the company’s remaining performance obligation (RPO) (or contracts not yet recognized as revenue) to $98 billion, up 44% from a year earlier. When RPO grows faster than revenue, it suggests sales growth is accelerating. This helps illustrate that Oracle is capitalizing on the growing demand for AI among its vast customer base.
The Path to $1 Trillion
Oracle’s long history in cloud and AI has enabled many new and existing enterprise customers to jump into generative AI, looking to benefit from the increased productivity that comes with AI adoption. That said, luck favors the patient, as this process will take some time to come to fruition.
According to Wall Street, Oracle is expected to generate revenue of $57.9 billion in its 2025 fiscal year (which began June 1), giving it a forward price-to-sales (P/S) ratio of about 7. Assuming its P/S remains constant, Oracle would need to grow revenue to about $148 billion annually to support a $1 trillion market cap.
Revenue grew 11% year over year in the most recent quarter and is expected to accelerate to 15% this fiscal year. If the company achieves 11% revenue growth, Oracle could reach a $1 trillion market cap by 2034. However, if the company can maintain a 15% growth rate, it would shave a few years off that timeline, reaching a $1 trillion market cap by 2032.
That said, estimates regarding the impact of generative AI adoption continue to rise. Conservative estimates put the market at between $2.6 trillion and $4.4 trillion annually, according to global management consulting firm McKinsey & Company.
If Oracle continues to successfully exploit this AI opportunity and continues its current growth trajectory, the company could reach a $1 trillion market cap sooner than many think.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former head of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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