Will Oracle Be a Trillion-Dollar Stock by 2030?

Over the last two years, artificial intelligence (AI) has been the hottest topic on Wall Street. Stocks like Nvidia have skyrocketed tenfold as individuals and organizations have embraced AI-powered tools at a breakneck pace. Yet Nvidia has made countless headlines, and other AI stocks have flown under the radar.

So, let’s examine one such stock that made its name in the 1990s but is once again flying high thanks to its AI potential, which could significantly impact its market valuation by 2030: Oracle (ORCL 1.41%).

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What does Oracle have to do with AI?

First, let’s examine why the AI revolution is breathing new life into Oracle.

In a nutshell, Wall Street is excited about Oracle’s popular database software and numerous data centers. Both of these are in high demand from big-name clients, such as OpenAI, Alphabet, and Microsoft.

That’s because demand for AI-powered tools is through the roof. As it stands, only so many companies can provide the enormous computing power required to run these complex applications, and Oracle is one of them.

In fact, Larry Ellison, board chair and chief technology officer of Oracle, recently told CNBC that the company was constructing some of the largest data centers on Earth:

Some [data centers] are getting close to, dare I say it, a gigawatt [in power usage], which is [equivalent to] a pretty good-sized city or one enormous AI cloud training data center.

In other words, training AI models requires immense physical computing resources, which Oracle is one of the few companies capable of supplying.

Will Oracle ride the AI wave to a market cap of $1 trillion?

Now that we understand why Oracle is benefiting from the AI revolution, it’s time to ask whether the company can parlay this situation into a market valuation above $1 trillion.

For those who may not be aware, Oracle is already a significant player in the market. As of now, its market cap stands at a substantial $400 billion, making it the 17th-largest American company, nestled between Mastercard ($417 billion) and Procter & Gamble ($393 billion).

Oracle’s market cap has seen a remarkable surge over the past two years, climbing from a low of $165 billion to its current valuation of $400 billion, which is also an all-time high. This is a significant leap for a company whose market cap had previously peaked at $259 billion 24 years ago.

ORCL Market Cap data by YCharts

With the AI wave on the horizon, Oracle is poised for even greater growth. Analysts anticipate a 9% increase in sales this year, with a further 11% growth expected next year.

However, for the company to hit a valuation of $1 trillion by 2030, Oracle’s stock would need to grow at a compound annual growth rate (CAGR) of 18.1%. Over the last five years, Oracle’s market cap has grown by 15%. If its current growth trend holds, Oracle will surpass the $1 trillion mark sometime in 2031.

At any rate, Oracle is enjoying a renaissance. Tech behemoths like Microsoft, Alphabet, and Amazon are investing tens of billions of dollars into AI projects, and some are partnering with Oracle because of its data center expertise.

Whether Oracle reaches a $1 trillion valuation is somewhat beside the point for investors. The company is benefiting from the AI revolution, and investors seeking exposure to the sector may want to give this under-the-radar AI stock a closer look.