Oracle (ORCL 1.45%) stock zoomed higher on June 11 after the company reported its fiscal 2025 fourth-quarter results (for the three months ended May 31), and the post-earnings bounce has taken its market cap to just over $600 billion.
The stock is up impressively as its Q4 numbers beat consensus expectations, and the outlook for the current year points toward a nice acceleration in growth. Oracle is benefiting from the rapid adoption of its cloud infrastructure services, which are being rented by customers for training artificial intelligence (AI) models and running inference in the cloud.
As a result, the company's growth should accelerate, not only in the current fiscal year, but over the next five years as well. In fact, it won't be surprising to see Oracle joining the trillion-dollar market cap club by the end of the decade, thanks to its AI-powered growth.
Let's take a closer look at the catalysts that could propel Oracle's market cap past $1 trillion by 2030.
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Oracle is on track to exceed its long-term guidance
At its financial analyst meeting held in September last year, Oracle management's fiscal 2029 guidance called for at least $104 billion in revenue, along with annual earnings per share growth of 20%-plus. However, the company now seems on track to exceed those projections.
Oracle now anticipates fiscal 2026 revenue to land at $67 billion, which is higher than the $66 billion guidance issued in September last year. That's not surprising, as Oracle management anticipates much stronger growth in its revenue pipeline in the current fiscal year, which could eventually allow it to exceed its updated growth expectations.
The company expects its remaining performance obligations (RPO) to more than double in fiscal 2026. That's a massive forecast, considering that the company ended fiscal 2025 with $138 billion in RPO, and the metric increased 41% year over year in the final quarter of the fiscal year. For comparison, Oracle ended fiscal 2024 with an RPO of $98 billion, which means that the metric grew by 40% during the year.
As RPO refers to the total value of a company's contracts that are yet to be fulfilled at the end of a quarter, the remarkable growth in this metric is great news for Oracle investors, as it points toward a fast-improving revenue pipeline. This is precisely why Oracle expects to deliver much faster top-line growth in the current fiscal year, and because its RPO growth is set to accelerate, it should be able to sustain impressive revenue growth levels over a longer period of time.
This is the reason why analysts significantly raised their revenue growth expectations for Oracle.
Data by YCharts.
Oracle's RPO forecast suggests that it could be sitting on around $280 billion worth of unfulfilled contracts by the end of the current fiscal year. The good part is that it could continue to land more contracts even after achieving such massive RPO because of the terrific opportunity in the cloud infrastructure market.
Goldman Sachs estimates that the global cloud computing market could generate a whopping $2 trillion in revenue by the end of the decade. The infrastructure-as-a-service market is expected to account for $580 billion of that opportunity, while software-as-a-service revenue could account for $780 billion. So Oracle still has more room for growth, and it is pulling the right strings to ensure that it makes the most of the available opportunities on offer.
The company currently has 29 dedicated data centers for its customers, and it is going to build another 30 in the current fiscal year. It is also going to increase the number of multicloud data centers from 23 to 70 in the next 12 months. This substantial increase in Oracle's capacity should allow it to capture more of the lucrative end market pointed out, and that's precisely why the company could end up joining the trillion-dollar club by the end of the decade.
Reaching a trillion-dollar market cap shouldn't be much difficult
Consensus estimates project Oracle's earnings to increase by 12% in the current fiscal year to $6.75 per share. This is set to be followed by much stronger growth over the next couple of fiscal years.
Data by YCharts.
Assuming the company maintains a 20% annual earnings growth rate in the two years after fiscal 2028, its bottom line could increase to $14.28 per share after five years. Oracle is trading at 32 times earnings right now, which is higher than its five-year average earnings multiple of 26. If it trades in line with its five-year average earnings multiple in 2030, its stock price could hit $381, which points toward 77% gains from current levels.
Oracle currently has a market cap of $603 billion, and the potential upside it could deliver by 2030 will easily help its valuation exceed $1 trillion. However, don't be surprised to see this AI stock delivering even stronger gains, as the market could reward it with a richer multiple on account of its accelerating growth.
Since Oracle now trades at a discount to the U.S. technology sector's average earnings multiple of 48, investors can consider buying this stock, given its attractive valuation and healthy upside potential.
