Larry Ellison, the chairman and technology chief of Oracle, spoke at the Oracle OpenWorld conference in San Francisco on September 16, 2019. The company’s recent success has caught the attention of Wall Street and investors. Oracle shares have been rising steadily, reaching a record high for the fifth consecutive day and the eighth time this month. Over the past year, the stock has seen a 73% increase, outperforming other large-cap enterprise tech stocks. In fact, if the shares continue to rise, 2023 could be the company’s best year for shareholders since the dot-com boom in 1999.
Oracle’s recent boost in the market can be attributed to its stronger-than-expected earnings and revenue. This positive news has led to upgrades in the stock’s rating, including one from Goldman Sachs, which changed its rating from sell to hold. Additionally, Larry Ellison’s net worth has risen significantly, allowing him to surpass Bill Gates and claim the No. 4 spot on Bloomberg’s list of billionaires.
Artificial intelligence (AI) has played a major role in exciting investors about Oracle’s future. Previously, the company was seen as a technology laggard, falling behind rivals in the cloud market. However, with the growing interest in generative AI, Oracle has experienced accelerated growth. The company has invested in Cohere, an enterprise-focused generative AI startup that is valued at over $2 billion. This investment has resulted in increased revenue and market share for Oracle.
Despite facing tough competition in the cloud infrastructure market, Oracle has managed to outperform its rivals. The company’s market cap now exceeds that of Salesforce, its longtime rival. Oracle’s revenue continues to grow, with an increase of 17% in the latest quarter. Furthermore, its cloud infrastructure revenue has surged by 76% compared to the previous year.
Analysts from Goldman Sachs believe that this growth is a result of Oracle’s price/performance advantage over its competitors. Despite entering the infrastructure as a service (IaaS) market late, Oracle has positioned itself for durable share gains. The company’s management has also indicated that there will be no change in capital expenditures for the upcoming fiscal year, which is a positive sign for free cash flow generation.
Oracle’s journey in the cloud market has not been without challenges. The company initially dismissed the rise of cloud computing, but eventually embraced it by offering cloud-based versions of its applications. Oracle’s cloud portfolio, including its Gen 2 cloud, has been well-received by customers. The company now boasts big-name clients, including Dollar Tree, Exxon Mobil, and Pfizer.
Overall, Oracle’s success in the AI market, combined with its strong cloud infrastructure growth, has positioned it as a leading player in the tech industry. Despite facing challenges along the way, the company’s future looks promising, and its CEO, Safra Catz, believes that their best days are yet to come.
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