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Larry Ellison and Monica Seles and Bill Gates (back row) watch Spain’s Carlos Alcaraz play against Germany’s Alexander Zverev in their quarterfinal match during the BNP Paribas Open in Indian Wells, California, March 14, 2024.
Clive Brunskill | Getty Images
It was a good year for Larry Ellison.
The oracle the co-founder amassed about $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 gained 27% in 2024, Oracle shares rose 63%, raising Ellison’s net worth to more than $217 billion, according to Forbesonly behind Tesla CEO Elon Musk and Amazon founder Jeff Bezos among the richest people in the world.
At 80, Ellison is a veteran in the tech industry, where his fellow billionaire founders are usually decades younger. Meta CEO Mark Zuckerbergwhose net worth has also surpassed $200 billion, is half his age.
But Ellison found the fountain of youth personally and professionally. After being divorced several times, Ellison was reported this month to be involved with a 33-year-old woman. And at a meeting with analysts in Las Vegas in September, Ellison was as busy as ever, saying that the night before, he and his son had dinner with his good friend Musk, who is advising President-elect Donald Trump ( then the Republican). nominee) while running Tesla and his other businesses.
Its big financial benefit came from Oracle, which maneuvered its way into the artificial intelligence craze with its cloud infrastructure technology and made its database more accessible.
ChatGPT creator OpenAI said in June that it will use Oracle’s cloud infrastructure. Earlier this month, Oracle he said had also taken over the business from Meta.
Startups, which often opt for the market leader Amazon Web services when choosing a cloud, they also engaged Oracle. Last year, video generation startup Genmo set up a system to train an AI model Nvidia Graphics processing units (GPUs) in Oracle’s cloud, said CEO Paras Jain. Genmo now relies on the Oracle cloud to produce videos based on the suggestions that users write on its website.
“Oracle has produced a different product than you can get anywhere else with GPU computing,” Jain said. The company offers “bare metal” computers that can sometimes deliver better performance than architectures that employ server virtualization, he said.
In his latest earnings report Earlier this month, Oracle missed analyst estimates and issued a forecast that was even weaker than Wall Street expected. The stock had its worst day of 2024, falling nearly 7% and eating into the year’s gains.
Still, Ellison was bullish about the future.
“Oracle Cloud Infrastructure trains some of the world’s most important generative AI models because we are faster and less expensive than other clouds,” Ellison said in the earnings release.
For the current fiscal year, which ends in May, Oracle is expected to record revenue growth of about 10%, which will mark its second strongest year of expansion since 2011.
Jain said that when Genmo has challenges, it communicates with Oracle’s sales executives and engineers through a Slack channel. The collaboration has resulted in improved reliability and performance, he said. He said Oracle worked with Genmo to ensure developers could launch the startup’s open-source Mochi video generator on Oracle’s cloud hardware with a single click.
“Oracle was also more price competitive than these large hyperscalers,” Jain said.
“It will be so easy”
Three months before its December earnings report, at the analyst event in Las Vegas, Oracle had given a rosy outlook for the next three years. Executive Vice President Doug Kehring said the company will generate more than $66 billion in revenue in fiscal year 2026, and more than $104 billion in fiscal 2029. The numbers suggest acceleration, with a compound annual growth of more than 16%, compared with 9% in the last quarter.
After Kehring and CEO Safra Catz spoke, it was Ellison’s turn. The company’s president, chief technology officer and the company’s top shareholder came on stage in a black sweater and jeans, greeted the analyst, licked his lips and sat down. For the next 74 minutes, he answered questions from seven analysts.
“Is – did he say $104 billion?” Ellison said, referring to Kehring’s projection. Some in the crowd laughed. “It’s supposed to be so easy. It’s kind of crazy.”
Oracle’s revenue in fiscal 2023 was just shy of $50 billion.
The new goal impressed Eric Lynch, chief executive of Scharf Investments, which held $167 million in Oracle shares at the end of September.
“For a company that’s been doing single digits for a decade, that’s incredible,” Lynch told CNBC in an interview.
Oracle co-founder and chairman Larry Ellison delivers a keynote speech during Oracle OpenWorld on October 22, 2018 in San Francisco, California.
Justin Sullivan | Getty Images
Oracle is still far behind in cloud infrastructure. In 2023, Amazon controlled 39% of the market share, followed by Microsoft at 23% and Google to 8.2%, according to industry research Gartner. That left Oracle with 1.4%.
But in database software, Oracle remains a stalwart. Gartner estimated that the company had 17% market share in database management systems in 2023.
Ellison’s challenge is to find opportunities to expand.
Last year, he visited Microsoft headquarters in Redmond Washington, for the first time to announce a partnership that allows organizations to use Oracle’s database through Microsoft’s Azure cloud. Microsoft also installed Oracle hardware in its data centers.
In June, Oracle launched a similar announcement with Google. Then, in September, Oracle finally partnered with Amazon, present their database on AWS.
Oracle and Amazon had been trading barbs for years. AWS introduced a database called Aurora in 2014, and Amazon has been working hard to distance itself from Oracle. After a CNBC report on effort, Ellison expressed doubt about Amazon’s ability to achieve its goal. But the project was successful.
In 2019, Amazon published a blog post titled, “Migration Complete – Amazon’s Consumer Business Just Turned Out of Final Oracle Database.”
More friendly vibe
Ellison looked at the history between the two companies at the analyst meeting in September.
“I got some kind of nice comment about Amazon uses Oracle, doesn’t use AWS, blah, blah,” he said. “And that hurt some people’s feelings. I probably wouldn’t have said that.”
He said a friend at a large 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 provide gains in database market share, said Mizuho analyst Siti Panigrahi, who has the equivalent of a buy rating on Oracle shares. AI-related cloud deals will also help Oracle fulfill its promise for faster revenue growth, he said.
“Oracle now has an end-to-end stack for businesses to build their AI strategy,” said Panigrahi, who worked in applications at Oracle in the 2000s.
So far, Oracle has primarily cut 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 not been recognized, 40% or 50% is related to GPU leases, Panigrahi said.
Oracle did not respond to a request for comment.
Panigrahi predicts that a wider range of businesses will begin to adopt AI, which will be a boon for Oracle given its hundreds of thousands of large customers.
There is also promise in Oracle Health, the segment 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 lost US market share in 2023, according to estimates of Search KLAS. But Ellison’s connection to Musk, who will co-head Trump’s Department of Government Efficiency, could benefit Oracle Health “if there is a greater push toward modernizing existing health systems,” Evercore analysts said in a note last week. It is recommended to buy the stock.
For now, Oracle is busy with AI to rewrite Cerner’s entire codebase, Ellison said at the analyst event.
“This is another pillar for growth,” he said. “I don’t think you’ve seen him properly yet.”
Hours earlier, Ellison had made a call to Marc Benioff, the co-founder and CEO of Salesforce. 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 great,” Benioff said in a wide-ranging interview the next day, regarding his chat with Ellison.
Benioff spoke about the latest fortune of his former boss.
“Larry really wants this,” Benioff said. “This is very important for him, that he has built a great company, what he believes is one of the most important companies in the world, and also, wealth is very important to him.”
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