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In today’s Cloud Wars Minute, I explore how Oracle’s ambitious expansion in cloud infrastructure and data centers is set to drive significant revenue growth and reshape its market positioning.
Highlights
00:23 — Oracle is projecting its total revenue will double over the next five years. That’s total revenue, not just cloud. For fiscal 2029, it’s expecting to reach $104 billion — a huge jump upward, driven by the power of the cloud business. My projection is that within that $104 billion, their cloud revenue will be somewhere between $70 billion and $75 billion.
01:11 — Now, that means it could pretty much triple over that five-year period. It’s currently around $20 billion, with an annualized rate of about $23 billion to $24 billion. Customers are finding great value in Oracle’s technology, and therefore the customer demand is strong. Its Remaining Performance Obligation (RPO) for the quarter ended August 31 was up 53% to $99 billion—an all-time high.
02:15 — Oracle is rapidly building out data centers. One, it is going as big as possible. On the other side, Oracle is going as small as possible. It is now able to fit an entire dedicated cloud region with every Oracle Cloud service into just three racks. This enables the multi-cloud partnership, where it can build a data center of its own embedded within Microsoft, AWS, and Google Cloud data centers.
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03:12 — It also allows it to be very aggressive about offering customers dedicated cloud regions. Oracle says, “Hey, customer, we know you don’t want to share cloud resources with others. Why not have your own complete, dedicated Oracle Cloud region in your data center?” Oracle can do that because it now just takes three telephone booth-sized racks — pretty remarkable.
04:11 — Executive Vice President of Operations Doug Kehring said that if you look at the years 2020, 2021, and 2022, its RPO compound annual growth rate was 12%. Moving to the next three years, 2022, 2023, and 2024, the compound annual growth rate for RPO was 46%. A big transition area is the move from on-prem customers to the cloud.
05:01 — He also noted that just two years ago, the AI market barely existed. Now, it is fueling a huge amount of demand for Oracle. The numbers and commitments it is receiving indicate that the market for AI companies seeking cloud infrastructure for AI training and inferencing has grown enormously. Oracle is on a roll.
