Oracle Stock Owners Rejoice as Larry Ellison Ascends to Billionaire Status Worldwide.
Oracle, the tech giant co-founded by Larry Ellison, has been making waves in the industry with its aggressive capital-intensive strategy and ambitious growth plans.
In a surprising turn of events, Oracle's capital expenditures (capex) have outpaced its earnings before interest, taxes, depreciation, and amortization (EBITDA), indicating a heavy investment in its future. Most of this spending is directed towards building data centers, a key component of Oracle's transformation into a cloud computing giant.
This capital-intensive strategy, while adding a considerable amount of risk to Oracle's investment thesis, is seen as a strength by many. It positions Oracle at the cutting edge of the future of hyper-efficient cloud computing.
The stock market has responded positively to this strategy. Oracle's shares surged 36% on Sept. 10, a significant boost for the company. However, this growth has not been without its ups and downs. On a separate day, Oracle experienced a 6.2% decline, while Tesla, another innovative company, saw a 6% increase.
Despite these fluctuations, Oracle has been on a steady upward trend. The company has nearly doubled in the last year and is up over 300% in the last three years. This impressive growth has made Larry Ellison, Oracle's co-founder and the company's CTO, the wealthiest person in the world.
However, Ellison's position at the top of the billionaire leaderboard is a close one. His massive stake in Oracle has made him virtually tied with Elon Musk, the CEO of Tesla. A recent surge in Oracle's stock caused Ellison to slip $1 billion below Musk, but the competition between these two tech visionaries shows no signs of abating.
Oracle's growth plans extend beyond its current success. The company has set a five-year roadmap aimed at growing Oracle Cloud Infrastructure (OCI) annual revenue from $10 billion to an astounding $144 billion. If achieved, this would surpass the combined revenue of Amazon Web Services, Microsoft Azure, and Alphabet's Google Cloud.
To achieve this ambitious goal, Oracle has identified strategic partnerships as key. One such partnership is with OpenAI, a leading AI company. This partnership includes Oracle providing massive data center capacity to support OpenAI's AI initiatives, a move that could position Oracle as a major player in the highly competitive cloud market.
Oracle's strategic shift from a large database infrastructure and enterprise software model to a cloud computing giant has not gone unnoticed. Even with the added risk from its capital-intensive strategy, the stock could still be a good long-term investment for risk-tolerant investors seeking innovative companies where founders still have substantial financial incentives to make growth investments pay off.
Meanwhile, the Walton Family's primary source of wealth remains around 45% ownership of Walmart, while Elon Musk's primary source of wealth is around 13% ownership of Tesla. Despite these differences, the competition between these tech giants and their founders continues to drive innovation and growth in the tech industry.
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