Larry Ellison and Monica Seles and Bill Gates (back row) watch Spain's Carlos Alcaraz play against Germany's Alexander Zverev in their quarter-final match at the BNP Paribas Open in Indian Wells, California , on March 14, 2024.
Clive Brunskill | Getty Images
It has been a good year for Larry Ellison.
Oracle's The co-founder has amassed an estimated $75 billion in paper wealth as the software company he started in 1979 enjoyed its biggest stock rally since 1999 and the dot-com boom.
While the S&P 500 index has gained 27% in 2024, Oracle shares have shot up 63%, raising Ellison's net worth to more than $217 billion, according to Forbesback only Tesla CEO Elon Musk and Amazon founder Jeff Bezos among the richest people in the world.
At 80, Ellison is a senior citizen in the technology industry, where his billionaire co-founders are usually decades younger. Meta CEO Mark Zuckerbergwhose net worth has also passed $200 billion, half his age.
But Ellison has found a fountain of youth personally and professionally. After being divorced several times, Ellison was reported this month to be engaged to a 33-year-old woman. And at a meeting with analysts in Las Vegas in September, Ellison was as earnest as ever, noting with disdain that the night before he and his son were having dinner with his good friend Musk, who is advising the President-elect. Donald Trump (then the Republican nominee) during his run Tesla and his other ventures.
Its big financial gain has come from Oracle, which has made its way into the artificial intelligence craze with its cloud infrastructure technology and has made its databases more accessible.
ChatGPT creator OpenAI said in June that it will use Oracle's cloud infrastructure. Earlier this month, Oracle said he had also built a business from Meta.
Startups, which often choose a market leader Amazon Web Services when building a cloud, has also been involved in Oracle. Last year, video generation startup Genmo set up a system to train an AI model Nvidia graphics processing units, or GPUs, in Oracle's cloud, CEO Paras Jain said. Genmo now relies on the Oracle cloud to produce videos based on the suggestions that users submit on their website.
“Oracle produced a different product than you get elsewhere with GPU computing,” Jain said. The company offers “bare metal” computers that sometimes provide better performance than architectures that use server virtualization, he said.
In the the latest income report earlier this month, Oracle came up short on analyst estimates and issued a forecast that was also weaker than Wall Street expected. The next day, the stock fell 7% in its worst performance of the year, eating into the gains for 2024.
Still, Ellison was optimistic for the future.
“Oracle Cloud Infrastructure trains several of the world's most important next-generation AI models because we're faster and cheaper than other clouds,” Ellison said in an earnings statement.
For the current fiscal year, which ends in May, Oracle is expected to record revenue growth of around 10%, which would mark its second strongest year of expansion since 2011.
Jain said that when Genmo has challenges, it communicates with sales executives and Oracle engineers through a Slack channel. The collaboration has led to improved reliability and performance, he said. Jain said Oracle worked with Genmo to ensure that developers could launch Mochi's open source video generator on Oracle's cloud hardware with one click.
“Oracle was also more competitive on pricing than these big hyperscalers,” Jain said.
'That's going to be so easy'
Three months before its earnings report in December, at an analyst event in Las Vegas, Oracle had given a forecast for the next three years. Executive Vice President Doug Kehring announced that the company would generate more than $66 billion in revenue in fiscal year 2026, and over $104 billion in fiscal 2029. The numbers suggested an acceleration, with a compound annual growth rate of more than 16%, compared to 9% in the last quarter.
After Kehring and CEO Safra Catz spoke, it was Ellison's turn. The company's chairman, chief technology officer and major shareholder entered the stage in a black sweater and jeans, waved to the analysts, pursed his lips and sat down. For the next 74 minutes, he answered questions from seven monitors.
“Did – did he say $104 billion?” Ellison said, referring to Kehring's projection. Some in the crowd laughed. “That's going to be so easy. It's kind of crazy.”
Oracle's revenue in fiscal 2023 was just shy of $50 billion.
The new target impressed Eric Lynch, managing director of Scharf Investments, who held $167 million in Oracle shares at the end of September.
“For a company that's been doing single digits for a decade or so, that's unbelievable,” Lynch told CNBC in an interview.
Oracle co-founder and Chairman Larry Ellison delivers a keynote address at the Oracle OpenWorld on October 22, 2018 in San Francisco, California.
Justin Sullivan | Getty Images
Oracle is still far behind in cloud infrastructure. By 2023, Amazon controlled 39% of the market, followed by Microsoft at 23% and Google at 8.2%, according to industry researcher Gartner. That left Oracle with 1.4%.
But in database software, Oracle remains a strong player. Gartner estimated that the company had a 17% market share in database management systems in 2023.
Ellison's challenge is to find opportunities to expand.
Last year, it was visit Microsoft headquarters in Redmond, Washington, for the first time to announce a partnership that would allow organizations to use the Oracle database through Microsoft's Azure cloud. Microsoft even installed Oracle hardware in its data centers.
In June, Oracle released a similar advertisement by Google. Then, in September, Oracle finally partnered with Amazon, including its database on AWS.
Oracle and Amazon had been exchanging barbs for years. AWS introduced a database called Aurora in 2014, and Amazon worked hard to distance itself from Oracle. Following a CNBC report the effort, Ellison expressed doubt about Amazon's ability to reach its goal. But the project succeeded.
In 2019, Amazon released a blog post with the title, “Migration Complete – Amazon Consumer Business Just Decommissioned Their Final Oracle Database.”
A friendlier love
Ellison looked back on the history between the two companies at the analyst meeting in September.
“I got some kind of nice comments about using Oracle at Amazon, not using AWS, blah, blah,” he said. “And that hurt some people's feelings. Maybe I shouldn't have said it.”
He said a friend at a major bank in New York had asked him to make sure the Oracle database was running on AWS.
“I said, 'Great. It makes sense to me,'” Ellison said.
The multi-cloud strategy should deliver gains in the database market segment, said analyst Siti Panigrahi of Mizuho, who has an equal buy rating on Oracle shares. AI-related Cloud deals will also help Oracle deliver on its promise of faster revenue growth, he said.
“Oracle now has an end-to-end stack for enterprises to build their AI strategy,” said Panigrahi, who worked on applications at Oracle in the 2000s.
Until now, Oracle has largely been cutting high-value AI deals with the likes of OpenAI and Musk's X.ai. Of Oracle's $97 billion in remaining performance obligations, or revenue that has yet to be recognized, 40% or 50% of it is tied to leasing GPUs, Panigrahi said.
Oracle did not respond to a request for comment.
Panigrahi predicts that a wider range of enterprises will begin to adopt AI, which will benefit Oracle with its hundreds of thousands of large customers.
There is also a stake in Oracle Health, the division that emerged from the company's $28.2 billion acquisition of electronic health record software vendor Cerner in 2022.
Yoshiki Hayashi, Marc Benioff and Larry Ellison attend USC's Transformative Medicine: Rebels with a Cause Gala in Santa Monica, California, on October 24, 2019.
Joshua Blanchard | Getty Images
Unlike rival Epic, Oracle Health will lose US market share in 2023, according to estimates from KLAS research. But Ellison's connection to Musk, who is set to co-head Trump's Department of Government Efficiency, could benefit Oracle Health “if there is a larger push toward modernizing existing health care systems.” there,” analysts at Evercore said in a note last week. They recommend buying the stock.
For now, Oracle is busy using AI to rewrite Cerner's entire code base, Ellison said at the analyst event.
“This is another pillar of growth,” he said. “I guess you haven't seen it yet.”
Hours earlier, Ellison had contacted Marc Benioff, co-founder and CEO of Sales force. Benioff knows Ellison as well as anyone, having worked for him for 13 years before starting the cloud software company that is now a major competitor.
“It was terrible,” Benioff said in a wide-ranging interview the next day, regarding his conversation with Ellison.
Benioff talked about his former boss' last run of fortune.
“Larry really wants this,” Benioff said. “This is very important to him, that he's building a great company, what he thinks is one of the most important companies in the world, and also to wealth is very important to him.
