Based on the given material, here’s my rewritten article:
In a crowded field of tech giants, Oracle (NYSE: ORCL) is making significant strides in the intersection of cloud AI infrastructure. Although smaller competitors, Oracle’s operating results over the past few quarters indicate impressive growth. According to Statista, Oracle’s market share in cloud infrastructure is significantly lower than industry leaders Amazon, Microsoft, and Alphabet, but the company’s current growth rate surpasses that of Amazon’s cloud business in its most recent quarter. This growth rate demonstrates the expanding demand for cloud infrastructure outside of the three leading providers.
Oracle’s remaining performance obligations (RPO), which provide insight into future revenue, hit a record high of $80 billion at the end of the most recent quarter. Management revealed that approximately 43% of the RPOs will be recognized as revenue within the next year. This suggests that Oracle’s demand for cloud services is robust.
Despite Oracle’s smaller market share, some experts predict that the company will take longer to grow to the same scale as industry leaders Microsoft, Amazon, and Alphabet. Currently, Oracle’s market cap is around $320 billion, and the company trades at a price-to-sales multiple of 6.3, which is notably lower than Microsoft and Alphabet.
However, considering Oracle’s rapid growth and the potential to transition its declining on-premise business into a new growth area, analysts argue that the company’s valuation could increase significantly over a long-term horizon, potentially reaching a trillion-dollar valuation. As cloud database management becomes increasingly vital to AI initiatives and digital transformation efforts in companies, Oracle’s valuation multiples may also expand substantially.
The Motley Fool’s Stock Advisor service recommends ten stocks for investors to purchase right now, and Oracle did not make the list. Nevertheless, the service provides investors with a straightforward strategy for success, including guidance on portfolio construction, frequent updates from analysts, and two fresh stock recommendations every month. Since 2002*, the Stock Advisor service has produced returns four times greater than the S&P 500.
Before investing in any stock, it’s crucial to understand that this transition will require some time. However, analysts believe that Oracle has already demonstrated considerable progress in the competitive cloud market. Holding the stock for the long term could lead to substantial gains.
Note: *Performance as of May 6, 2024.
Disclosure: At the time of writing, John Mackey, a former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive 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 to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adam Spatacco holds 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.
Prediction: This Artificial Intelligence (AI) Cloud Stock Will Join Microsoft, Alphabet, and Amazon in the $1 Trillion Club was originally published by The Motley Fool
Based on the given text, what are some factors driving Oracle’s growth in cloud AI infrastructure and why do analysts believe it has the potential to reach a trillion-dollar valuation?
Some factors driving Oracle’s growth in cloud AI infrastructure include its impressive revenue growth in cloud services, particularly in the most recent quarter, and the increasing importance of cloud database management in AI initiatives and digital transformation efforts in companies. Analysts believe that Oracle has the potential to reach a trillion-dollar valuation due to its ability to transition its declining on-premise business into a new growth area, as well as the expanding demand for cloud infrastructure outside of the leading providers. Additionally, Oracle’s RPO, which provides insight into future revenue, hit an all-time high at the end of the most recent quarter, suggesting that demand for its cloud services is robust.
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