Oracle’s Cloud Ambitions: Leveraging AI and Data Centers

Oracle CTO Larry Ellison has big plans for the company’s future in the cloud. Having initially downplayed the importance of cloud technology over a decade ago, Ellison is now positioning Oracle to become a leading force in three key areas: cloud databases, cloud applications, and the construction and operation of cloud data centers.

Ellison believes Oracle’s strong database presence gives it a unique advantage. Most of the world’s most valuable data is already stored in Oracle databases, and this data is increasingly being migrated to the cloud. Whether it's Oracle Cloud Infrastructure (OCI), Azure, AWS, or Google Cloud Platform, Oracle's multicloud strategy allows customers to use the Oracle database in the cloud of their choice, complete with associated AI capabilities. This flexibility has been a significant factor in Oracle’s cloud database success, with quarter-over-quarter revenue growth of 115%.

The latest version of Oracle’s database, Oracle 23ai, is specifically designed for AI workloads. According to Ellison, Oracle 23ai is the only database that can make all customer data instantly available to popular AI models while fully preserving customer privacy. CEO Safra Catz backs this assertion with solid growth figures, noting that cloud database services grew by 31%, and revenue from the company’s Autonomous Database grew by 47%.

Cloud databases are one of the three key revenue drivers for Oracle, alongside OCI and SaaS. Catz attributes the growth to the increasing migration of on-premises databases to the cloud, either directly via OCI or via Database@Cloud Services.

Becoming the top player in cloud applications may prove more challenging. While Oracle’s application business has shown improvement, its total SaaS revenue for the fiscal year is $13.4 billion, up 10%. By comparison, Salesforce generated $10 billion in SaaS revenue last quarter alone. Ellison sees significant potential in AI agents for enterprise applications, aiming to become the world’s largest and most profitable cloud applications company. This goal hinges on Oracle’s execution of AI, with the company developing comprehensive AI-powered application suites for various business areas and industries, leveraging partnerships with AI providers such as OpenAI, X.ai, and Meta’s Llama.

For its cloud data centers, Oracle is focusing on infrastructure that requires a much smaller footprint. Ellison avoided directly labeling Oracle as the top player in cloud infrastructure but emphasized the company’s plan to build more data centers than all of its competitors combined. This strategy has contributed to the strong growth of OCI, with all data centers featuring full OCI capabilities and relying heavily on automation to increase efficiency and minimize errors.

Ellison cited unprecedented demand for Oracle cloud capacity, which currently exceeds supply. One customer recently requested all available capacity worldwide, a first for Oracle. Despite intensive efforts to rapidly expand data centers and optimize networks, meeting demand for data center capacity remains challenging, even for Oracle.

Oracle’s cloud ambitions are clear: dominate the cloud database market, leverage AI to enhance its application business, and build a robust network of cloud data centers. These strategies aim to position Oracle as a leading player in the highly competitive cloud market.