7 months ago
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The U.S. economy has a history of producing the world's most valuable companies. United States Steel became the first-ever $1 billion company in 1901, and 117 years later, Apple became the first company in the world to surpass a $1 trillion valuation.
Apple is now worth over $3 trillion, but since 2018, tech giants Nvidia, Microsoft, Amazon, Meta Platforms, and Alphabet have joined it in the trillion-dollar club. But I think yet another is on track to join them.
Oracle (NYSE: ORCL) was founded in 1977 and has since participated in nearly every technological revolution. Right now, it's quickly becoming a leader in artificial intelligence (AI) data center infrastructure, which could be the company's ticket to a $1 trillion valuation.
Based on Oracle's current market cap of $429 billion, investors who buy its stock today could earn a gain of 133% if it gets there.
A leader in AI infrastructure
Large language models (LLMs) are at the foundation of every AI software application. They are trained by ingesting mountains of data, and from there, the model identifies patterns and learns to make predictions. Typically, the "smartest" AI applications are powered by the LLMs with the most data, and the training process is facilitated by centralized data centers filled with graphics processing units (GPUs).
Nvidia supplies the world's most powerful GPUs for developing AI models. Simply put, the more GPUs a developer can access, the more data they can feed into an LLM, and the faster it can be processed. The Oracle Cloud Infrastructure (OCI) Supercluster technology allows developers to scale up to more than 32,000 Nvidia GPUs (and soon, over 65,000), which is more than any other data center provider.
Plus, the company's random direct memory access (RDMA) networking technology moves data from one point to another more quickly than traditional Ethernet networks. Since developers often pay for computing capacity by the minute, OCI is among the fastest and cheapest solutions for training LLMs. That's why AI leaders like OpenAI, Cohere, and Elon Musk's xAI are now using Oracle.
Oracle chairman Larry Ellison says the company currently has 85 live data centers, with 77 under construction. However, he estimates the company will eventually have somewhere between 1,000 and 2,000, so it has barely scratched the surface of its opportunity so far.
Automation is one thing that sets Oracle apart from other data center operators. No matter its size, every Oracle data center is identical in terms of functionality, so the company is able to manage them all with software alone -- no humans required. Not only is that a big cost savings for the end-user, but it also creates a more secure service by eliminating human error. Plus, automation is the key to scaling up Oracle's data center locations into the thousands.
