Larry Ellison has a great year with Oracle making its biggest profit since the dot-com boom

It’s been a good year for Larry Ellison.

oracle’s The co-founders amassed approximately $75 billion in paper assets as the software company they founded in 1979 enjoyed its biggest stock rally since 1999 and the dot-com boom.

The S&P 500 index rose 27% in 2024, while Oracle stock soared 63%, pushing Ellison’s net worth to more than $217 billion, according to Forbes. tesla CEO Elon Musk and Amazon Founder Jeff Bezos is one of the richest people in the world.

Mr. Ellison, 80, is a senior figure in the technology industry, where billionaire founders are typically decades younger. meta CEO Mark Zuckerberg’s net worth has ballooned to over $200 billion, and he’s half his age.

But Ellison has found a fountain of youth both personally and professionally. Ellison has been divorced several times, and it was reported this month that he was in a relationship with a 33-year-old woman. And at a meeting with analysts in Las Vegas in September, Ellison was as enthusiastic as ever, noting that the night before he and his son had dinner with his close friend Musk, an adviser to President-elect Donald Trump (then a Republican). He spoke frankly about it. candidate) while running tesla and his other businesses.

His big financial boon comes from Oracle, which has capitalized on the artificial intelligence boom with cloud infrastructure technology that has made databases more accessible.

ChatGPT creator OpenAI announced in June that it would use Oracle’s cloud infrastructure. Earlier this month, Oracle announced it had also won business from Meta.

Startups often choose market leaders Amazon Web Services also leverages Oracle in its cloud choices. Last year, video generation startup Genmo set up a system to train AI models. Nvidia Oracle’s cloud is equipped with graphics processing units (GPUs), CEO Paras Jain said. Genmo currently leverages the Oracle cloud to create videos based on prompts that users enter on their website.

“Oracle has developed a product using GPU computing that is unlike anything available anywhere else,” Jain said. The company says it offers “bare metal” computers that can deliver better performance than architectures that employ server virtualization.

Oracle’s latest earnings report, released earlier this month, missed analysts’ expectations and issued forecasts that were weaker than Wall Street’s expectations. The stock had its worst day in 2024, falling nearly 7% and eating into this 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 it’s faster and cheaper than other clouds,” Ellison said in the earnings call.

For the current fiscal year, which ends in May, Oracle is expected to record revenue growth of about 10%, which would be the second strongest year of expansion since 2011.

Jain said Genmo communicates with Oracle sales executives and engineers through Slack channels when it encounters issues. This collaboration has improved reliability and performance, he said. Jain said Oracle has teamed up with Genmo to enable developers to launch the startup’s Mochi open source video generator on Oracle’s cloud hardware with one click.

“Oracle was more price competitive than these big hyperscalers,” Jain said.

Three months before its December earnings report, Oracle offered a rosy outlook for the next three years at an analyst event in Las Vegas. Executive Vice President Doug Koehling declared that the company will generate more than $66 billion in revenue in fiscal year 2026 and more than $104 billion in fiscal year 2029. This number suggests an acceleration with a compound annual growth rate of more than 16% year-on-year. % in the latest quarter.

After Koehring and CEO Safra Catz spoke, it was Ellison’s turn. The company’s chairman, technology chief and largest shareholder strutted onto the stage in a black sweater and jeans, waved to analysts, licked his lips, and sat down. For the next 74 minutes, he answered questions from seven analysts.

“Did he say $104 billion?” Ellison said, referring to Koehring’s prediction. Some in the crowd laughed. “It’s that simple. It’s kind of crazy.”

Oracle’s fiscal 2023 revenue was just under $50 billion.

The new goal impressed Eric Lynch, managing director at Scharff Investments, who owned $167 million in Oracle stock at the end of September.

“This is incredible for a company that has been doing single digits for about 10 years,” Lynch said in an interview with CNBC.

Oracle is still far behind in cloud infrastructure. In 2023, Amazon controlled 39% of the market share, followed by Microsoft with 23%. google 8.2%, according to industry researcher Gartner. This brought Oracle to 1.4%.

But when it comes to database software, Oracle remains the dominant company. Gartner estimates that the company will reach 17% market share for database management systems in 2023.

Ellison’s challenge is to find opportunities for expansion.

Last year, he first visited Microsoft’s headquarters in Redmond, Washington, to announce a partnership that will allow organizations to use Oracle’s databases through Microsoft’s Azure cloud. Microsoft installed Oracle hardware in its data centers.

In June, Oracle made a similar announcement to Google. And in September, Oracle finally partnered with Amazon to bring its database to AWS.

Oracle and Amazon have been at loggerheads for years. AWS introduced a database called Aurora in 2014, and Amazon worked hard to migrate away from Oracle. Following CNBC’s reporting on the initiative, Ellison expressed doubts about whether Amazon would be able to meet its goals. However, the project was successful.

In 2019, Amazon published a blog post titled “Migration Complete – Amazon’s Consumer Business Turns Off its Final Oracle Database.”

Ellison looked back on the history of both companies at an analyst conference in September.

“I ended up making some cute comments like Amazon uses Oracle and AWS doesn’t,” he said. “And it hurt some people’s feelings. I probably shouldn’t have said that.”

He said a friend at a major bank in New York asked him to make sure his Oracle database ran on AWS.

“I said, ‘Great. That makes sense to me,'” Ellison said.

Mizuho analyst Siti Panigrahi, who has a buy rating on Oracle stock, said the multi-cloud strategy should lead to increased database market share. He said AI-related cloud deals will also help Oracle deliver on its promise of faster revenue growth.

“Oracle now has an end-to-end stack for enterprises to build their AI strategies,” said Panigrahi, who worked on applications at Oracle in the 2000s.

Until now, Oracle has primarily made high-value AI deals with companies such as OpenAI and Musk’s X.ai. Of Oracle’s $97 billion in remaining performance obligations, or revenue not yet recognized, 40% or 50% of it is tied to GPU rentals, Panigrahi said.

Oracle did not respond to requests for comment.

Panigrahi predicts a broader range of companies will begin to adopt AI, which will benefit Oracle, which has hundreds of thousands of large customers.

There are also hopes for Oracle Health, the division created from the company’s $28.2 billion acquisition of electronic health records software vendor Cerner in 2022.

Unlike rival Epic, Oracle Health lost U.S. market share in 2023, according to estimates from KLAS Research. But Evercore analysts said in a memo last week that the ties between Musk and Ellison, who will serve as co-head of President Trump’s Office of Government Efficiency, are likely to be linked to “a strong push toward modernizing the existing health care system.” “If it does,” he said, “it could benefit Oracle Health.” They recommend buying stocks.

For now, Oracle is busy leveraging AI to rewrite Cerner’s entire codebase, Ellison said at an analyst event.

“This is another pillar of growth,” he said. “I don’t think I’ve looked closely yet.”

Hours earlier, Ellison had called co-founder and CEO Marc Benioff. sales force. Mr. Benioff knows Mr. Ellison better than anyone, having worked for him for 13 years before starting the cloud software company that is now a major competitor.

“It was awesome,” Benioff said of his conversation with Ellison in a wide-ranging interview the next day.

Benioff spoke about his former boss’s recent good fortune.

“Larry really wants this,” Benioff said. “This is very important to him. He is building a great company, what he believes to be one of the most important companies in the world, and wealth is also very important to him. It’s important.”