Source: PaxForex Premium Analytics Portal, Fundamental Insight
Oracle has had an outstanding year, delivering a 62% return to investors and emerging as one of the top-performing tech stocks in the S&P 500 for 2024. The company's impressive growth is fueled by strong demand for its cloud services, which are crucial for enterprises scaling their AI infrastructure. As Oracle's earnings momentum continues to build, investors are optimistic about the stock's potential heading into 2025 and beyond.
Could Oracle achieve a trillion-dollar market cap by the end of the decade? Let's explore the numbers and where this cloud computing powerhouse is headed.
The recent surge in Oracle's stock price underscores its success in continually evolving its leading database platform. The Oracle Autonomous Database has gained traction for its ability to provide cost-effective, high-performance, and scalable solutions. In addition, Oracle’s hybrid cloud offerings, including IaaS, PaaS, and SaaS, are being adopted by an increasing number of businesses across various sectors.
One of the most significant developments in recent years has been the rise of AI as a new growth catalyst for Oracle. The data-heavy demands of AI infrastructure, including the use of Nvidia GPUs for AI model training, have made Oracle Cloud more indispensable than ever.
The company’s fiscal 2025 first-quarter results further illustrate its momentum. Oracle reported a 7% increase in revenue and a 20% jump in EPS compared to the same period last year. Cloud revenue was particularly strong, growing by 21%, which helped offset a gradual decline in legacy hardware sales.
A standout metric is Oracle's remaining performance obligation (RPO), which reached an all-time high of $99 billion - up 53% from last year. This backlog of contracts that haven’t yet been recognized as revenue offers a clear runway for future growth. For the upcoming year, Oracle’s management is guiding for double-digit revenue growth, with expectations that the cloud infrastructure segment will continue to outpace 2024’s performance.
Looking at the big picture, Oracle has a viable path toward becoming a trillion-dollar company. With a current market cap of $465 billion, the stock would need to rise about 115% to reach that milestone. Historically, earnings growth has been a key driver of stock prices, and Oracle is delivering on this front. The company aims to exceed $104 billion in revenue by fiscal 2029, nearly doubling its 2024 revenue of $53 billion, while projecting EPS growth of more than 20% annually over the next five years.
If Oracle’s stock tracks these financial trends and grows by roughly 16.5% per year, it could hit a trillion-dollar valuation by 2029, with a stock price of around $358. For context, the stock has returned 27% annually since 2019.
Currently, Oracle shares are trading at 27 times the consensus forward EPS estimate of $6.29. If the company meets its EPS target of $12 by 2029 and maintains a P/E ratio of 30, this would position the stock to achieve the valuation required for a trillion-dollar market cap.
The key to Oracle's future success lies in its ability to maintain a robust operational and financial strategy while strengthening its market share in cloud databases. Whether Oracle reaches a trillion-dollar market value by 2029 or later, the company remains a leader in the tech sector, well-positioned to deliver long-term returns to shareholders. In light of its growth prospects, Oracle's stock earns a buy rating.
As long as the price is above 165.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 174.28
- Take Profit 1: 185.00
- Take Profit 2: 190.00
Alternative scenario:
If the level of 165.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 165.00
- Take Profit 1: 160.00
- Take Profit 2: 155.00
