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The American economy has a history of producing the most valuable companies in the world. American steel became the very first $1 billion company in 1901, and 117 years later Apple became the first company in the world to surpass $1 trillion in valuation.
Apple is now worth over $3 trillion, but since 2018 they have been tech giants Nvidia, Microsoft, Amazon, MetaplatformsAnd Alphabet have joined the trillion dollar club. But I think there’s another one on the way to join them.
Oracle (NYSE: ORCL) was founded in 1977 and has participated in virtually every technological revolution since. Right now, it’s quickly becoming a leader in artificial intelligence (AI) data center infrastructure, which could be the company’s ticket to a $1 trillion valuation.
Based on Oracle’s current market cap of $429 billion, investors who buy shares today could see a 133% gain if it gets there.
A leader in AI infrastructure
Large Language Models (LLMs) are the foundation of any AI software application. They are trained by ingesting mountains of data, and from there the model identifies patterns and learns to make predictions. Usually the ‘smartest’ AI applications are powered by the LLMs with the most data, and the training process is facilitated by centralized data centers filled with graphics processing units (GPUs).
Nvidia provides the world’s most powerful GPUs for developing AI models. Simply put, the more GPUs a developer has access to, the more data they can input into an LLM and the faster it can be processed. Oracle Cloud Infrastructure (OCI) Supercluster technology allows developers to scale to more than 32,000 Nvidia GPUs (and soon more than 65,000), which is more than any other data center provider.
Additionally, the company’s Random Direct Memory Access (RDMA) networking technology moves data from one point to another faster than traditional Ethernet networks. Because developers often pay for computing power by the minute, OCI is one of the fastest and cheapest solutions for training LLMs. That’s why AI leaders like OpenAI, Cohere, and Elon Musk’s xAI are now using Oracle.
Oracle Chairman Larry Ellison says the company currently has 85 live data centers, with 77 under construction. However, he estimates that the company will eventually have somewhere between 1,000 and 2,000, so so far it has barely scratched the surface of its capabilities.
Automation is one thing that sets Oracle apart from other data center operators. Regardless of size, each Oracle data center is identical in functionality, so the company can manage them all using software alone, without the need for humans. This not only results in major cost savings for the end user, but also ensures a safer service by eliminating human errors. Additionally, automation is key to scaling Oracle’s data center locations to thousands.
Oracle’s data center revenues are soaring
Oracle generated total revenue of $13.3 billion in the first quarter of fiscal 2025 (ended August 31), up 7% from the year-ago period. The OCI segment in particular generated $2.2 billion in revenue, up a whopping 46%.
As in previous quarters, OCI’s revenue would have grown even faster in the first quarter if the company had had more data centers online. It currently has a huge backlog of customers waiting for more computing capacity.
That’s reflected in Oracle’s remaining performance obligations, which reached a record $99 billion during the quarter, up 52% year over year. That was an acceleration from the 44% growth the company achieved in the final quarter of fiscal 2024. Oracle signed 42 new GPU capacity deals worth $3 billion in the first quarter alone, contributing to the sharp increase in remaining performance obligations (RPOs).
CEO Safra Catz believes that 38% of the company’s RPOs (approximately $37.6 billion) will convert to revenue in the next twelve months, which should help the company return to double-digit revenue growth. Moreover, she expects an acceleration of OCI growth compared to the previous fiscal year.
Oracle’s (mathematical) path to the $1 trillion club
Oracle has generated earnings per share of $3.88 over the last twelve months. So, based on the current share price of $155.89, it is trading at a price-to-earnings (P/E) ratio of 40.2. The Nasdaq-100 The technology index trades at a price-to-earnings ratio of 30.7, so Oracle shares certainly aren’t cheap compared to their peers.
However, Oracle’s trailing-twelve-month profits rose 15% compared to the prior period, and Wall Street is forecasting accelerated earnings growth of 24% for the full fiscal year 2025. That could explain why investors are now willing to pay a premium for their shares.
Mathematically, if Oracle’s price-to-earnings ratio remains constant, the company could reach a $1 trillion valuation within the next decade, even if earnings growth slows to just 8.8%. But that’s a very conservative estimate as it could grow its data center footprint based on Ellison’s comments tenfold in the long term. If that happens, Oracle’s earnings growth will likely accelerate, not slow down, over the next decade.
Remember, the company’s data centers rely on automation, providing incredible scalability. In other words, Oracle should experience growing gross profit margins as more data centers are built, which will be a huge boost to revenues.
As a result, I think Oracle has a great opportunity to join its big tech peers in the $1 trillion club within the next decade.
Should You Invest $1,000 in Oracle Now?
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool holds 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 to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has one disclosure policy.
1 unstoppable stock that could join Nvidia, Microsoft, Apple, Amazon, Alphabet and Meta in the $1 trillion club was originally published by The Motley Fool