Larry Ellison is having a breakout year as Oracle makes the most money since the dot-com boom
Larry Ellison and Monica Seles and Bill Gates (back row) watch as Carlos Alcaraz of Spain plays against Alexander Zverev of Germany in their quarterfinal match during the BNP Paribas Open in Indian Wells, California on March 14, 2024.
Clive Brunskill | Getty Images
This was a good year for Larry Ellison.
Oracle’s co-founder amassed roughly $75 billion in paper wealth as the software company he started in 1979 enjoyed its biggest stock rally since 1999 and the dot-com boom.
While the S&P 500 gained 27% in 2024, Oracle shares rose 63%, lifting Ellison’s net worth to more than $217 billion, according to the data Forbesjust behind Tesla CEO Elon Musk and Amazon founder Jeff Bezos among the richest people in the world.
At 80, Ellison is a senior citizen in the tech industry, where his fellow billionaire founders are generally decades younger. Target CEO Mark Zuckerbergwhose net worth has also grown past $200 billion, is half his age.
But Ellison has found the fountain of youth both personally and professionally. After going through several divorces, Ellison reported this month to be in a relationship with a 33-year-old woman. And at a meeting with analysts in Las Vegas in September, Ellison was as engaged as ever, quickly mentioning that the night before he and his son had dinner with his good friend Musk, who advises the president-elect Donald Trump (then the Republican candidate) while he was running Tesla and his other ventures.
His big financial boon came from Oracle, which maneuvered the AI frenzy with its cloud infrastructure technology and made its databases more affordable.
ChatGPT creator OpenAI said in June that it would use Oracle’s cloud infrastructure. Earlier this month, Oracle he said he also took over the job from Meta.
Startups, which often decide to be the market leader Amazon Web services also engage Oracle when choosing a cloud. Last year, video generation startup Genmo deployed a system to train AI models Nvidia graphics processing units, or GPUs, in Oracle’s cloud, CEO Paras Jain said. Genmo now relies on the Oracle cloud to produce videos based on queries that users type into its website.
“Oracle has produced a different product than what you get elsewhere with GPU computing,” Jain said. The company offers “bare” computers that can sometimes provide better performance than architectures that use server virtualization, he said.
In his latest earnings report Earlier this month, Oracle fell short of analysts’ estimates and posted a forecast that was also weaker than Wall Street had expected. The stock had its worst day in 2024, falling nearly 7% and eating up annual gains.
Still, Ellison was optimistic about the future.
“Oracle Cloud Infrastructure trains several of the world’s most important generative AI models because we’re faster and cheaper than other clouds,” Ellison said in an earnings release.
For the current fiscal year, which ends in May, Oracle is expected to post revenue growth of about 10%, which would mark its second strongest year of expansion since 2011.
Jain said that when there are challenges, Genmo communicates with Oracle’s sales executives and engineers through a Slack channel. The collaboration has resulted in better reliability and performance, he said. Jain said Oracle worked with Genma to ensure that developers can run the startup’s open-source Mochi video generator on Oracle’s cloud hardware with a single click.
“Oracle was also more cost competitive than these large hyperscalers,” Jain said.
‘It will be so easy’
Three months before its December earnings report, at a gathering of analysts in Las Vegas, Oracle gave a rosy forecast for the next three years. Executive Vice President Doug Kehring said the company will generate more than $66 billion in revenue in fiscal year 2026. over 104 billion dollars in fiscal 2029. The numbers suggested an acceleration, with a compound annual growth rate of over 16%, compared to 9% in the most recent quarter.
After Kehring and CEO Safra Catz spoke, it was Ellison’s turn. The company’s chairman, chief technology officer and major shareholder strutted onto the stage in a black pullover and jeans, waved to analysts, licked his lips and sat down. For the next 74 minutes, he answered questions from seven analysts.
“Did – did he say $104 billion?” Ellison said, referring to the Kehring projection. Some in the crowd giggled. “That’ll be so easy. It’s kind of crazy.”
Oracle’s revenue in fiscal 2023 was barely $50 billion.
The new target impressed Eric Lynch, director of Scharf Investments, who held $167 million in Oracle stock at the end of September.
“That’s incredible for a company that’s been doing single-digit business for a dozen years,” Lynch said in an interview with CNBC.
Oracle co-founder and chairman Larry Ellison delivers the keynote address during Oracle OpenWorld on October 22, 2018 in San Francisco, California.
Justin Sullivan | Getty Images
Oracle is still far behind in cloud infrastructure. In 2023, Amazon controlled 39% of the market share, followed by Microsoft with 23% and Google to 8.2%, according to industry researcher Gartner. That left Oracle with 1.4%.
But in database software, Oracle remains the stalwart. Gartner estimated that the company had a 17% market share in database management systems in 2023.
Ellison’s challenge is to find opportunities to expand.
Last year, he visited the headquarters of Microsoft in Redmond, Washington, for the first time to announce a partnership that would enable organizations to use Oracle’s database through Microsoft’s Azure cloud. Microsoft has even installed Oracle hardware in its data centers.
In June, Oracle released a similar announcement with Google. Then, in September, Oracle finally teamed up with Amazon, introducing your database on AWS.
Oracle and Amazon have traded criticism for years. AWS introduced a database called Aurora in 2014, and Amazon has been working hard to distance itself from Oracle. Following a CNBC report at work Ellison expressed doubt about Amazon’s ability to achieve its goal. But the project succeeded.
In 2019, Amazon released a blog post titled “Migration Complete – Amazon’s Consumer Business Just Shut Down Its Last Oracle Database.”
A friendlier atmosphere
Ellison reflected on the history between the two companies at an analyst meeting in September.
“I got kind of cute when I commented that Amazon was using Oracle, not AWS, blah, blah,” he said. “And it hurt some people’s feelings. I probably shouldn’t have said that.”
He said a friend at a large New York bank asked him to make sure the Oracle database was running on AWS.
I said, ‘Great. It makes sense to me,’ Ellison said.
The multi-cloud strategy should yield gains in database market share, said Mizuho analyst Siti Panigrahi, who has the equivalent of a buy rating on Oracle shares. AI-related cloud contracts will also help Oracle deliver on its promise of faster revenue growth, he said.
“Oracle currently has an end-to-end stack for enterprises to build their AI strategy,” said Panigrahi, who worked on applications at Oracle in the 2000s.
Until now, Oracle has mostly made high-value AI deals with OpenAI and Musk’s X.ai. Of Oracle’s $97 billion in remaining performance obligations or revenue not yet recognized, 40% or 50% of that is related to GPU rentals, Panigrahi said.
Oracle did not respond to a request for comment.
Panigrahi predicts that a wider range of enterprises will begin to adopt AI, which will be a boon for Oracle given its hundreds of thousands of large customers.
Also showing promise is Oracle Health, a segment that emerged from the $28.2 billion acquisition of electronic health record software vendor Cerner in 2022.
Yoshiki Hayashi, Marc Benioff and Larry Ellison attend the Transformative Medicine of USC: Rebels with a Cause Gala in Santa Monica, California on October 24, 2019.
Joshua Blanchard | Getty Images
Unlike rival Epic, Oracle Health lost market share in the US in 2023, according to estimates from KLAS research. But Ellison’s connection to Musk, who is slated to co-head Trump’s government efficiency department, could benefit Oracle Health “if there is a larger shift toward modernizing existing health care systems,” Evercore analysts said in a note last week. They recommend buying shares.
For now, Oracle is busy using artificial intelligence to rewrite Cerner’s entire code base, Ellison said at a gathering of analysts.
“This is another pillar for growth,” he said. “I don’t think you’ve quite seen him yet.”
A few hours earlier, Ellison called Marc Benioff, co-founder and CEO Salesforce. Benioff knows Ellison as well as anyone, having worked for him for 13 years before he started the cloud software company that is now a major competitor.
“It was great,” Benioff said in a lengthy interview the next day, regarding the conversation with Ellison.
Benioff talked about his former boss’s latest fortune.
“Larry really wants this,” Benioff said. “That is very important to him, to build a big company, which he believes is one of the most important companies in the world, and also, wealth is very important to him.”
