The past five years have been quite rewarding for Oracle (ORCL +1.16%) investors. An investment of $1,000 in Oracle stock five years ago is worth more than $4,600, as of this writing.
The phenomenal rally in Oracle stock in the past five years has helped it become the 13th largest company in the world, with a market cap of $830 billion. Investors may now be wondering if this technology giant has the ability to deliver more gains over the next five years, following the remarkable surge that it has enjoyed in recent years.
However, Oracle's latest update suggests that it could indeed become a much bigger company by 2030. Let's see how much upside Oracle investors can expect in the next five years.
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Oracle is expecting a much stronger growth rate through 2030
Oracle's revenue in its most recently concluded fiscal year 2025 (which ended on May 31) came in at $57.4 billion. For comparison, its top line in fiscal 2020 was $39.1 billion. So, Oracle's revenue increased at a compound annual growth rate (CAGR) of 8% during this five-year period.
NYSE: ORCL
Key Data Points
The good part is that Oracle is now growing at a much faster pace. The company reported a year-over-year increase of 12% in its revenue in the first quarter of fiscal 2026. It expects to finish the current fiscal year with $67 billion in revenue, which would be an improvement of over 17% from the year-ago period. Even better, the company is forecasting an acceleration in its revenue growth over the remaining four fiscal years.
Specifically, Oracle expects its top line to hit $225 billion in fiscal 2030. That suggests Oracle is expecting its revenue to increase at a CAGR of almost 32% over the next five fiscal years, which would be a 4x improvement over the growth that it has clocked in the past five years. For some context, Oracle was earlier anticipating its top line to hit at least $104 billion in fiscal 2029, which means that it has significantly upgraded its forecast.
Additionally, the company is anticipating its non-GAAP (generally accepted accounting principles) earnings per share to increase at a CAGR of 28% through the end of the decade, an improvement over the earlier estimate of at least 20% growth. At this rate, Oracle forecasts that its earnings could hit $21 per share by 2030.
Importantly, Oracle has the ability to indeed achieve its guidance for the next five years. That's because the demand for the company's cloud computing infrastructure is growing at an incredible pace. From enterprise customers to artificial intelligence (AI) companies to cybersecurity companies to telecom providers, several companies are tapping the Oracle Cloud Infrastructure (OCI) to run their workloads in Oracle's data centers.
This explains why the company's remaining performance obligation (RPO), which refers to the total value of its unfulfilled contracts at the end of a period, stood at a whopping $455 billion at the end of the previous quarter. That metric shot up by 359% from the year-ago period as the demand for OCI outpaced supply.
Even better, Oracle management says that its RPO is on track to jump over half a trillion dollars in the next few months on the back of more multibillion-dollar contracts. As it turns out, Oracle has signed $65 billion worth of new OCI contracts in the first month of the fiscal second quarter. That probably excludes the blockbuster five-year contract worth $300 billion that Oracle struck with OpenAI last month.
The size of this contract suggests that Oracle's RPO could now be well beyond the $800 billion mark. That should be enough to cover the cumulative revenue that Oracle is forecasting for the next five years.
Here's how much upside this AI stock can deliver
We have already gone over the growth that Oracle is expecting for the next five years, including its estimated revenue and earnings in 2025. Assuming that the company manages to indeed hit $21 per share in earnings after five years and trades at 28.5 times forward earnings at that time (identical to the tech-heavy Nasdaq-100 index's forward earnings multiple), its stock price could jump to $599.
That's 116% higher than Oracle's current stock price. What's worth noting is that the forward earnings multiple assumed above is at a significant discount to Oracle's trailing price-to-earnings ratio of 67. But if the market decides to reward Oracle with a premium valuation considering its ability to clock faster-than-projected growth, it could end up delivering bigger gains by 2030.
That's why investors looking to add a top AI stock to their portfolios can still buy Oracle, as it isn't done soaring yet.
