Oracle Stock To $900: Its Simple Math

Core Insights - Oracle's stock has surged 30% in after-hours trading following its latest earnings report, with a cumulative gain of 3x since early 2023, indicating strong market confidence in its growth potential [2][3] - The company's remaining performance obligations (RPO) have increased by 359% year-over-year to $455 billion, suggesting a robust revenue pipeline [3][4] - Oracle has outlined a clear revenue growth trajectory for its Cloud Infrastructure, projecting revenues of $18 billion in 2025, $32 billion in 2027, and reaching $200 billion by 2030 [4][17] Revenue and Growth Projections - The RPO represents contracts already signed, indicating that Oracle's future revenue is largely secured and not reliant on speculative growth [4][5] - The projected revenue growth for Oracle Cloud Infrastructure is significant, with estimates of $73 billion by 2028 and $144 billion by 2030 [4] - The company is expected to maintain operational leverage, with a target price of $900 per share based on a conservative 40x P/E ratio for 2030 [8][9] Market Position and Competitive Landscape - Oracle Cloud Infrastructure is positioned as a key player in the AI and cloud market, benefiting from the increasing demand for computational resources driven by the AI revolution [6] - The company is expanding aggressively while competitors face capacity constraints, allowing Oracle to capture market share in high-growth segments [7] - Despite the positive outlook, Oracle faces competition from major players like Amazon AWS and Microsoft Azure, which could impact its market position [10] Financial Metrics - Current trailing revenues for Oracle stand at $59 billion, with a forecast of $200 billion by 2030 [17] - The current P/E ratio is 52x, with an estimated EPS of $23 for 2030, leading to a target price of $920 based on a 40x multiple [17] - The company's strong revenue visibility and growth trajectory suggest that a 3x increase in stock price over the next four to five years is plausible [16]