Will Oracle be worth more than Microsoft by 2030?

Oracle (ORCL 5.12%) it was once considered a slow-growth technology stock that was held primarily for stable returns instead of aggressive earnings. It was one of the largest providers of database software in the world, but that market was cooling and had not moved to cloud-based services as quickly as Microsoft, Amazonand other tech giants. It plowed a lot of cash into buybacks, which boosted its EPS, but suggested it was running out of ways to scale the business.

But over the past five years, Oracle’s stock has tripled in value S&P 500 less than 90% advanced. The bulls rushed back as it expanded its cloud-based services, reduced its reliance on on-premise software and steadily grew its revenue again. Oracle’s $450 billion market cap still makes it much smaller than Microsoft, which is worth $3.2 trillion, but could it continue to grow and eclipse the tech titan’s valuation by 2030?

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How fast is Oracle growing?

From fiscal 2020 to fiscal 2024, which ended in May, Oracle’s revenue grew at a compound annual growth rate (CAGR) of 8% as its earnings per share grew at a CAGR of 5%.

Data source: Oracle.

Oracle’s EPS was boosted by a one-time tax benefit in fiscal 2021, but fell after beating that gain in fiscal 2022. In fiscal 2023, its earnings were boosted by its $28 billion acquisition of the healthcare IT services Cerner, which closed. at the beginning of fiscal year 2023 (in June 2022). It has also bought back 16% of its shares over the past five years.

Oracle’s long-term strategy is to expand its higher-growth cloud software and cloud infrastructure services segments to reduce its reliance on its slower-growing on-premise software. Its core growth drivers include enterprise resource planning services Netsuite and Fusion and the Oracle Cloud Infrastructure platform, and it has gradually tied more of Cerner’s cloud services to that expanding ecosystem.

Oracle generated 42% of its revenue from its cloud-based software-as-a-service and infrastructure-as-a-service segments in the first quarter of fiscal 2025. That combined segment’s revenue grew 22% year-over-year — which which represented only a slight slowdown from the 23% increase in the fourth quarter of fiscal year 2024.

For the full year, Oracle expects its total revenue to grow by “double digits” as total cloud infrastructure revenue PUShES from its 50% growth in fiscal 2024. This growth is expected to be driven by its new Gen 2 cloud infrastructure platform, which is being built to meet the growing market demand for more robust AI services.

Oracle probably won’t become more valuable than Microsoft

From fiscal 2024 to fiscal 2027, analysts expect Oracle’s revenue to grow at a CAGR of 12% as its EPS grows at a CAGR of 22%. Those growth rates are robust, but its stock isn’t a screaming deal at 30 times next year’s earnings.

Assuming it maintains that valuation, matches Wall Street expectations and grows its EPS at a 20% CAGR from 2027 to 2031, the stock price could rise more than 160% to around $420 by the end of the decade. That would boost its market cap to about $1.2 trillion — but it would still be less valuable than Microsoft today.

As for Microsoft, the tech titan still has a lot of irons in the fire. Its Azure cloud infrastructure platform is expanding, its other cloud services are growing, and it’s integrating a lot of OpenAI’s generative AI tools into its own ecosystem. It also continues to expand its Xbox gaming ecosystem with new cloud-based services and large acquisitions.

From fiscal 2024, which ended in June, to fiscal 2027, analysts expect Microsoft’s revenue and EPS to grow at a CAGR of 14% and 15%, respectively. Like Oracle, its shares don’t look cheap at 32 times next year’s earnings either. But if Microsoft maintains this forward valuation, matches consensus forecasts and grows its EPS at a 15% CAGR through fiscal 2031, its market cap could grow nearly 140% to $7.6 trillion by 2030.

Therefore, Oracle will not come anywhere close to matching Microsoft’s market capitalization unless the latter is broken up into smaller companies by antitrust regulators. So instead of comparing Oracle to Microsoft or other cloud giants, investors should simply focus on its resilience and how it could continue to beat the market with its steady growth over the long term.