The cloud computing giant is on track to become a much bigger company over the next three years.
Oracle (ORCL -0.89%) has made investors significantly richer in the past three years, turning an investment of $1,000 into the stock into almost $4,600, as of this writing. The stock’s remarkable jump of 358% during this period has significantly outpaced the 84% gains clocked by the S&P 500 (^GSPC 0.01%).
Oracle’s market-beating gains in the past three years have taken its market cap to $802 billion. Investors may now be wondering if this technology giant is capable of delivering more gains considering its massive market cap, which has now made it the 14th-largest company in the world. However, the good part is that Oracle has the ability to become a much bigger company in the next three years.
Let’s look at the reasons why.
Oracle’s business is primed for a massive liftoff over the next three years
Oracle concluded its fiscal 2025 on May 31 this year. The company ended the year with $57.4 billion in revenuean increase of 8% from the prior year. What’s worth noting is that Oracle’s revenue at the end of fiscal 2022 was $42.4 billion. So, its top line increased at a compound annual growth rate (CAGR) of just more than 10.6% in the past three years.
The cumulative revenue generated by the company in fiscal years 2023, 2024, and 2025 stood at more than $160 billion. There is a solid chance that Oracle’s growth could take off impressively over the next three years. Analysts are expecting its top-line growth rate to double in fiscal 2026. It is expected to finish the year with $67 billion in revenue.
Looking ahead, that growth rate is likely to accelerate in the next couple of fiscal years. That’s because Oracle has started the current fiscal year with an astronomical revenue backlog. It reported a whopping $455 billion in remaining performance obligations (RPO) at the end of fiscal Q1, an increase of 359% from the prior year. That number is nearly thrice the revenue generated by the company in the last three fiscal years combined.
The massive size of this backlog is a result of the rapidly growing demand for Oracle’s cloud infrastructure, which is being used by its customers to build, train, and deploy artificial intelligence (AI) applications. Oracle’s wide presence in 51 regions across 26 countries where it is offering more than 150 cloud-based services, as well as its multicloud offerings through which customers can run apps on popular cloud services such as Microsoft Azure, Amazon‘s AWS, and Alphabet‘s Google Cloud, have made this company one of the best ways to capitalize on the cloud infrastructure boom.
Importantly, Oracle is ramping up its infrastructure at an aggressive pace. It plans to increase the number of multicloud data centers for its three hyperscale customers to 71 from the current reading of 34. It also plans to double the number of dedicated Oracle data centers this year to almost 60. In all, Oracle is going to build more data centers than all of its competitors combined, as chairman Larry Ellison pointed out earlier this year.
This puts Oracle well on its way to converting a significant chunk of its revenue backlog into actual revenue. And that’s precisely the reason why this tech stock is likely to head higher in the next three years.
The company’s accelerating revenue growth will result in more upside
Investors have already seen that Oracle’s revenue growth rate is expected to pick up significantly this year. The good part is that this trend is expected to continue in the next couple of fiscal years. This is evident from the chart.
ORCL Revenue Estimates for Current Fiscal Year data by YCharts
By fiscal 2028, Oracle’s revenue is expected to close in on almost $120 billion. That will be a significant jump from its projected revenue in the next fiscal year. This jump in Oracle’s revenue growth after a couple of years can be attributed to its capacity-building efforts. As the company rolls out more data centers, it should be able to accelerate its revenue growth given its huge RPO.
If Oracle indeed generates $120 billion in revenue after three years and trades at 9 times sales at that time (in line with the U.S. technology sector’s average sales multiple), its market cap could jump to $1.08 trillion. That points toward a potential jump of 34% from current levels. Oracle, however, could deliver a stronger jump if the market continues to reward it with a premium valuation (its current sales multiple is 14) on account of the bump in its growth.
Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Oracle. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
