It’s impossible to ignore how rapidly artificial intelligence (AI) has advanced in recent years. Numerous corporations that have embraced this transformative technology have quickly climbed the ladder to become some of the world’s most valuable companies by market capitalization. As of Tuesday’s market close, 11 companies belonged to the exclusive $1 trillion club, and most of them have deep involvement with AI.
After trading ended, industry leader Oracle ( ORCL 1.37%) released its latest quarterly earnings. Even though the company fell short of analysts’ expectations, the stock shot up and continued to rally. What caused this? Oracle secured a series of multibillion-dollar contracts, significantly boosting its outlook for future expansion.
These significant agreements strongly suggest that Oracle is on the verge of entering this elite group. The company’s growth has reached a crucial stage, and management’s statements indicate a long runway for AI-driven development ahead.
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Oracle occupies a prominent position in the tech industry, serving an estimated 98% of Global Fortune 500 firms. The company delivers a powerful blend of cloud, database, and enterprise software solutions. As the AI revolution gained momentum, Oracle’s wide customer base increasingly turned to its expanding suite of cloud and AI offerings.
Although Oracle’s growth has varied, its prospects appear promising. In Oracle’s first quarter of fiscal 2026 (ended Aug. 31), total revenue increased 11% year-over-year to reach $14.9 billion, while adjusted earnings per share (EPS) grew 6% to $1.47. Both metrics improved from the previous quarter, yet still came in below Wall Street’s forecasts of $15 billion in revenue and $1.48 in adjusted EPS.
But those numbers weren’t the main story. Last quarter, CEO Safra Catz described the company as reaching a “tipping point,” emphasizing that revenue growth was picking up speed, “and the momentum is only going to increase.”
That statement turned out to be modest. Oracle reported an astonishing 359% year-over-year jump in its remaining performance obligation (RPO)—future contractual revenue yet to be recognized—soaring to $455 billion from $138 billion in the previous quarter.
Catz highlighted, “We finalized four multibillion-dollar deals with three different customers in the first quarter,” calling these outcomes “remarkable.” He further noted that demand for Oracle Cloud “keeps rising.” The company anticipates closing “several more multi-billion-dollar contracts, and RPO is projected to surpass half a trillion dollars.”
Looking ahead, Oracle expects its Oracle Cloud Infrastructure revenue to climb 77% to $18 billion this year, but that’s just the opening act:
- Cloud revenue of $32 billion for fiscal 2027, representing a 78% increase.
- Cloud revenue of $73 billion for fiscal 2028, up 128%.
- Cloud revenue of $144 billion for fiscal 2029, an increase of 97%.
Importantly, these projections refer only to Oracle Cloud Infrastructure revenue, and Catz pointed out that “the majority of revenue in this five-year outlook is already secured in our reported RPO.” This suggests that any new contracts will likely push these growth targets even higher.
The journey to $1 trillion just became much quicker
Oracle is capitalizing on its trusted reputation to assist clients in choosing the right AI and cloud strategies while benefiting from the accelerating adoption of generative AI.
Prior to the latest earnings results, analysts expected Oracle to deliver $66.75 billion in revenue for fiscal 2026 (which began June 1), resulting in a forward price-to-sales (P/S) ratio of about 10. With that ratio, Oracle would need to earn about $98 billion in annual revenue to support a market cap of $1 trillion. Based on these numbers, Oracle could have crossed the $1 trillion threshold before 2028.
Analysts have not yet updated their models, but with the scale of Oracle’s recent performance, previous predictions no longer apply. Provided there are no unexpected setbacks, I anticipate Oracle will reach the $1 trillion milestone within the next year.
Forecasts for the potential of generative AI continue to rise. According to Price Waterhouse Coopers (PwC), a major accounting firm, the opportunity could be valued at up to $15.7 trillion annually by 2030, highlighting the enormous potential.
With these recent contract wins, Oracle has shown it is using its expertise to benefit from this major opportunity. The signs are clear: Oracle is on track to join the ranks of trillion-dollar companies very soon.
