Three years of doubling revenue, Oracle has become the "new Nvidia."

Three years of doubling revenue, Oracle has become the "new Nvidia."

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Explosive growth prospects are transforming Oracle from a traditional database company into a core player in the wave of AI infrastructure.

In the recently released Q1 financial report, Oracle boldly predicted that its revenue will double over the next three years. This stunning growth trajectory is turning the company into a hot “new NVIDIA” in the eyes of investors.

The report shows that its Remaining Performance Obligations (RPO, i.e., signed contracts with revenue not yet recognized) increased more than twofold in three months, reaching $455 billion. Even more surprising, Oracle claimed that there are additional multi-billion dollar deals under negotiation, which will soon push this figure past the $500 billion mark.

This sharp surge in contracted revenue is mainly driven by enormous AI computing power demand from giants like OpenAI, prompting Oracle to make extremely bold forecasts for the years ahead. Currently, Oracle expects its cloud infrastructure revenue to reach $114 billion by fiscal 2029, while for the year ended in May, that number was just over $10 billion.

Boosted by this news, Oracle’s share price, which had already risen 45% this year, soared another 35% on Wednesday, nearly doubling year-to-date, with a market cap approaching $950 billion. According to FactSet data, the company posted its biggest single-day gain since the 1990s on Wednesday.

Placing Big Bets Amid Uncertainty

In reality, making long-term forecasts in a rapidly changing tech boom like AI may not be a wise move.

Even NVIDIA, considering such uncertainties, usually avoids predicting sales or profits more than a quarter ahead. Oracle’s biggest rivals in cloud and AI services—Microsoft, Google, and Amazon—do not even separately list AI-related revenue in their financial statements.

However, what sets Oracle apart is that it is still run by Chairman Larry Ellison. For decades, even though he has managed a company dealing with some of the most “mundane” areas of computing together with CEO Safra Catz, he has always been one of Silicon Valley’s most daring figures.

Oracle’s upbeat outlook reflects not just Ellison’s boldness, but also the confidence of leaders in the AI field about the sustainability of this boom.

Whether RPO Can Be Converted to Revenue Is Key

Oracle’s optimistic forecasts are built on a massive order book.

However, having a contract is one thing; successfully converting it into actual revenue in the years ahead is another. Turning commitments on paper into real cash flow is a process full of challenges.

For Oracle, whether the remaining performance obligations can be turned into revenue depends on whether the company can build the networks needed to fulfill these contracts. This requires electricity, permits, and key equipment like NVIDIA GPUs, which are in high demand and perpetually in short supply.

Significant Technological Advantages, Sizzling Inference Demand, Support from NVIDIA…

Although Oracle faces execution challenges and its competitors like Amazon, Google, and Microsoft have capital expenditures far exceeding its record planned $35 billion for this fiscal year, analysts believe Oracle has strong advantages of its own.

Scotiabank analyst Patrick Colville pointed out in a report Wednesday that Oracle has “top-tier technical expertise, plenty of funding, deep support from NVIDIA, and independence, which makes it fully capable of capitalizing on the explosive demand for AI training and inference.”

The analysis also noted that Oracle’s growth is largely tied to AI inference.

As AI focus shifts from training better models to deploying them for millions of new users, inference activity is expected to increase significantly, which could bring Oracle a more stable source of revenue.

Despite the bright outlook, Oracle has set itself highly challenging targets. The company’s stock now trades at about 48 times forward earnings, and its own forecasts indicate that AI computing will make up the vast majority of total revenue in the coming years.

This means that compared to competitors, Oracle’s future is more tightly bound to the longevity of the AI boom. If AI demand ultimately cools, diversified giants like Microsoft can still rely on massive businesses such as spreadsheets, but Oracle’s fate will be hit more directly.

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