The dawn of artificial intelligence (AI) in early 2023 caused a paradigm shift in the tech landscape, minting more than a few winners. Over the past year, information technology (IT) specialist and cloud provider Oracle (ORCL -6.72%) has joined the fray in earnest. The stock has risen roughly 68% over the past year and 259% since early 2023, as its cloud and AI strategy begins to take hold. The company's robust results have driven its market cap to roughly $828 billion (as of this writing).
Despite Oracle's impressive performance, I believe Palantir (PLTR 0.11%) -- with a current value of $422 billion -- will be worth more than Oracle by 2030.
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A battle of the AI titans
Oracle has been on fire recently, and it's easy to see why. While revenue is growing by low double-digits, the future looks bright. Its remaining performance obligation (RPO) -- commonly called backlog -- surged 359% to a record $455 billion. Furthermore, management predicted that revenue from Oracle Cloud Infrastructure (OCI) -- the company's cloud segment -- will grow 77% this year to $18 billion and sevenfold to $144 billion by 2030.
For its part, Palantir has generated eight successive quarters of accelerating revenue growth and shows no signs of slowing. In the second quarter, revenue grew 48% year over year and 14% quarter over quarter, surpassing $1 billion for the first time. Palantir reported a record-setting $2.27 billion in total contract value (TCV), up 140%, and U.S. commercial TCV that soared 222% to $843 million.
This shows there are reasons to like both stocks.
There can be only one...
Wall Street expects Oracle to generate revenue of $67 billion in its fiscal 2026 (which began June 1), resulting in a forward price-to-sales (P/S) ratio of about 13. Furthermore, the company is expected to grow revenue by 28.7% annually over the next five years, bringing its estimated annual sales to about $156 billion by 2030. If its P/S remains constant, Oracle's market cap will climb to roughly $2 trillion.
Oracle isn't the only one whose AI expertise has sparked a growth spurt. Wall Street expects Palantir to generate revenue of $4.16 billion in 2025, resulting in a forward P/S ratio of 101. Analysts expect Palantir's annual revenue growth to be 38.8% over the next five years. At this rate, its yearly sales would grow to $21 billion by 2030. If its P/S remains constant, Palantir's market cap will be about $2 trillion.
This suggests that both companies are on track to reach a $2 trillion market cap by 2030. Here's the thing: I believe investors are underestimating Palantir's accelerating revenue growth, which I predict will continue to accelerate. Using Palantir's recent 48% growth rate over the next five years shows how it could easily surpass Oracle's market cap by 2030.
The obvious downside to this prediction is that Palantir is wildly overvalued right now, selling for 210 times next year's expected earnings. With a valuation of that magnitude, any failure to deliver -- real or imagined -- could send Palantir stock careening lower, causing investors to reassess Palantir's lofty multiple.
That caveat aside, I believe Palantir will continue its upward trajectory and outpace Oracle by 2030.
