Market-Cap Madness: Oracle Leapfrogs Salesforce on Cloud Surge

Just 10 months after the market was stating that Salesforce was 40% more valuable than Oracle, Larry Ellison and his revitalized cloud business have pushed Oracle’s market cap almost 10% higher than Salesforce’s. 

On my weekly Cloud Wars Top 10 rankings, Salesforce is #4 and Oracle is #6.

I’d also like to point out that the “Market-Cap Madness” phrase in the headline does not mean I disagree with the current valuations of Oracle and Salesforce; rather, it’s a standard headline-opener I use when analyzing the market-cap ebbs and flows of the big players in the greatest sustained growth market the world has ever known. Here are a couple of examples from last year: 

• Market-Cap Madness: ServiceNow at $90 Billion Halfway to Oracle and SAP at $180 Billion, Sept. 28, 2020 (Update: as of yesterday, ServiceNow was at $111 billion, Oracle was at $243.1 billion and SAP was at $175.7 billion.)
• Market-Cap Madness: ServiceNow Jumps to $100 Billion, IBM Slumps to $104 Billion, Oct. 20, 2020 (Update: as of yesterday, IBM was at $126 billion, ServiceNow at $111 billion.)

Ten months ago—on Sept. 1, 2020—Salesforce’s market cap hit an all-time high of $256 billion, which was 40% higher than Oracle’s $173 billion at that same time. 

But in this latest chapter of Market-Cap Madness, what’s particularly nutty about the current situation with Oracle at $243.1 billion and Salesforce at $225 billion is that just 6 weeks ago, Salesforce CEO Marc Benioff was proclaiming that his company had just turned in the greatest quarterly performance in its storied 22-year history. My take on that was The Marc Benioff Show: Inside Salesforce’s Greatest Quarter Ever.

So what the heck happened? 

Did Salesforce follow that blowout fiscal-Q1 with a bomb in the first month of its fiscal Q2? No, I don’t think so; I don’t think this latest chapter in Market-Cap Madness has anything to do with what Benioff & Co. have done or not done.

Rather, I think this is a matter of Oracle chairman Larry Ellison and CEO Safra Catz delivering unequivocally on their often-stated claims that the Oracle cloud business was on the verge of a breakthrough, that the long-promised cloud-revenue boom was just around the corner. And in their fiscal Q4 earnings call a month ago, Ellison and Catz released not only very impressive numbers but also a growth strategy that the market—at least for now—has pounced upon. My takes:

• Larry Ellison Shows His Cards: Oracle ERP Revenue Could Reach $30B
• Oracle CEO Safra Catz More Bullish Than I’ve Ever Seen: 10 Examples

I say “at least for now” because, as you can see from the fluctuating numbers above, the market-cap makers are a fickle bunch, and as each of the world-class Cloud Wars Top 10 rolls out its quarterly numbers, financial analysts can tend to swoon in tune with the latest figures, proclaiming eternal fealty and devotion that generally lasts until right about the time the next big cloud provider releases its results. And those new numbers often make the analysts’ hearts go pitter-pat in an entirely different direction.

So we all need to bear in mind that market caps represent a long-term game, and that we should not allow ourselves to get whipsawed by the short-term fluctuations that are not just inevitable but relentless in a market as big, fast-growing, dynamic and essential as that of the enterprise cloud.

Moral of the story: don’t get sucked into the madness.

Disclosure: at the time of this writing, Oracle, Salesforce and SAP were all among the many clients of Cloud Wars Media LLC and/or Evans Strategic Communications LLC.

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