Oracle is betting on its database dominance, AI vision, and massive data center investments in a bid to overtake current giants in the cloud.
Never one to be shy with words, Oracle CTO Larry Ellison has big plans once again.
Having initially downplayed the importance of the cloud over a decade ago, the Oracle (NYSE:ORCL) founder announced in a Q4 earnings call that Oracle aims to become No. 1 in three key areas: cloud databases, cloud applications, and the construction and operation of cloud data centers.
Ellison believes Oracle is uniquely positioned to achieve that first goal, given that most of the world’s most valuable data is already stored in Oracle databases, he said. According to Ellison, this data is now increasingly being migrated to the cloud — be it to Oracle Cloud Infrastructure (OCI), Azure, AWS, or Google Cloud Platform.
That destination flexibility is another key factor for Oracle’s cloud database future, Ellison said, underscoring that the company’s multicloud strategy gives customers the opportunity to use the Oracle database in the cloud of their choice, including associated AI capabilities. According to Ellison, this flexible model is proving very popular, resulting in quarter-over-quarter revenue growth of 115%.
Ellison also called out the latest version of Oracle’s database, Oracle 23ai, as being specifically tailored to the needs of AI workloads. According to Ellison, Oracle 23ai is “the only database that can make all customer data instantly available to all popular AI models while fully preserving customer privacy.”
Oracle CEO Safra Catz backed up Ellison’s assertion that AI will further increase Oracle’s cloud database market share with solid growth figures: According to Catz, cloud database services grew by 31%, and revenue from the company’s Autonomous Database grew by 47%.
Catz, who sees cloud databases as one of the three key revenue drivers for Oracle in the future, alongside OCI and SaaS, said this growth was due in part to on-premises databases being increasingly migrated to the cloud, either directly via OCI or via Database@Cloud Services.
Betting on AI agents to increase application business
Becoming No.1 in cloud applications may prove more difficult, however: Although Oracle’s application business performed better than previous periods, its total SaaS revenue for the entire fiscal year is $13.4 billion, up 10%. By comparison, Salesforce generated $10 billion in SaaS revenue last quarter alone.
Like Salesforce CEO Marc Benioff, Ellison sees enormous potential in AI agents for enterprise applications. The Oracle founder’s aim to become the world’s largest and most profitable cloud applications company will depend largely on its execution on AI.
To that end, Oracle says it is developing comprehensive AI-powered application suites for various business areas and industries. Using modern technologies and partnerships with AI providers such as OpenAI, X.ai, and Meta’s Llama, Oracle aims to offer a “depth and breadth of AI-based applications unparalleled in the market.”
Oracle’s data center aspirations
For its cloud data centers, Oracle relies on infrastructure that requires a much smaller footprint, Ellison said. However, he chose his words carefully and avoided directly labeling Oracle as the top player in cloud infrastructure, though he emphasized that Oracle would build more data centers than all of its competitors combined.
This strategy has contributed significantly to the strong growth of OCI. All OCI data centers feature full OCI capabilities and rely heavily on automation to increase efficiency and minimize errors.
Ellison also cited unprecedented demand for Oracle cloud capacity, which currently exceeds supply. For example, one customer recently requested all available capacity worldwide, a first for Oracle, he said.
Despite intensive efforts to rapidly expand data centers and optimize networks, meeting demand for data center capacity remains challenging. Even Oracle is reaching its limits in terms of construction speed, Ellison said.
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