Oracle gains momentum in AI computing after initial struggles
- Oracle grew from a CIA contract in the late 1970s into a significant player in AI and cloud computing.
- The company's revenue is projected to soar by 77% to $18 billion by fiscal year 2026, driven by demand for AI data center capacity.
- Oracle’s future growth may be contingent on sustained AI demand despite current validation of its business strategy.
In the late 1970s, a startup founded by Larry Ellison along with two fellow programmers received a pivotal contract from the CIA to develop a database system, named Oracle. This marked the genesis of what would become a major tech corporation. As Oracle has evolved, particularly in recent years, it has emerged as a key player in the growing artificial intelligence industry, fueled by expanding needs for computing resources. The momentum gained as AI applications surged pushed Ellison to a pinnacle of wealth, making him the world’s richest person at one point in time. Oracle's cloud computing sector has shown staggering growth, with a projected revenue increase of 77% in its fiscal year 2026, aiming for $18 billion by that time. Growth was significantly attributed to remaining performance obligations, which surged 359% year-over-year, demonstrating the enormous appetite in the market for data center capabilities, especially in the AI space. Investors and analysts have highlighted this shift as a watershed moment for the company, suggesting it has now validated its transformation strategy. In addition to its internal developments, Oracle has also been in talks concerning potential control over TikTok's US operations, a move that could further augment its market reach. Discussions between relevant political figures in the U.S. and China indicated that Oracle was a strong contender for this deal, which would bring them access to a vast user base along with monetization opportunities. This potential acquisition underscores Oracle’s strategic approach to bolstering its influence within the tech industry, particularly on consumer-facing platforms. Despite the positive outlook, analysts remain cautious, noting that Oracle’s growth is heavily dependent on ongoing demand within the AI sector. Although currently on an upward trajectory, any slowdown in AI adoption could hit Oracle harder compared to larger competitors like Microsoft or Google. As AI continues to shape the technology landscape, Oracle's future will depend on its ability to navigate challenges and capitalize on the expanding data needs from AI companies.