What Oracle CEO Said 55 Hours Ago Will Shock You
I’m old enough to remember when Oracle was $13 per share in 2003 and by 2006 it was still $13 per share.
The company seemed as old and boring and stodgy as any tech company could become. It was almost like an IBM relic that would gather dust, selling software to enterprises and producing a boatload of cash flow but really doing nothing to excite investors or innovate.
Fast forward a decade and more, and Oracle has ignited a market frenzy. The share price is up 55% for the year and the last monthly alone produce a rally of 19%.
And while there’s lots to like about Oracle that caused the share price to ignite, what its CEO, Larry Ellison, said 55 hours ago is perhaps the most important takeaway to making money over the next 5 years.
Key Points
- Oracle’s stock surged 55% this year, shedding its “boring” image and capturing market attention.
- Larry Ellison notes that AI entry costs $100 billion, limiting it to a few giants like Alphabet, Microsoft, Apple, and Oracle, all dependent on NVIDIA.
- NVIDIA, as the key AI supplier, is positioned for continued growth, with dips potentially presenting buying opportunities for investors.
What Did Larry Say?
On stage, Larry Ellison was asked what he thinks about where AI is headed and what the future holds. His answer was as telling as any insight you’ll get on the future of the world, and who will benefit.
“I went to dinner with Elon & Jensen Huang (CEO of NVIDIA), and would describe the dinner as…me & Elon begging Jensen for GPUs. Please take our money…No, no, take more of it. You’re not taking out enough. We need you to take more of our money, please”
In Larry’s view, the cost to play in the AI space will not be in the hundreds of millions or billions. He believes it costs $100 billion to gain entry to the space and that only a handful of companies, let alone countries, will be able to pay the price to play.
For now, all of those companies must pay a toll to a single company, NVIDIA, and the runway extends for at least 5 years.
He argues that it’s going to be crucially important to be first, but failing that being best at something will be game-changing for those companies, whether its in the biomedical field or synthesizing videos.
$ORCL CTO Larry Ellison: “I went to dinner with @elonmusk, Jensen Huang..& I would describe the dinner as Oracle & me & Elon begging Jensen for GPUs. Please take our money….No, no, take more of it. You’re not taking out enough. We need you to take more of our money, please” pic.twitter.com/atBUJaULCS
— The Transcript (@TheTranscript_) September 14, 2024
The Key Takeaway
Arguably, the only companies that can play in the field are Alphabet, Microsoft, Apple, Oracle, Amazon, and Musk’s own X. Perhaps a few others will enter the fray but that’s the shortlist of who is likely to win the AI game long-term.
Over the short-to-medium term a single company sells to them all, NVIDIA. And for investors that means, in spite of the volatility, and drawdowns between now and 2029, the odds are high that even after its massive run-up in recent years, NVIDIA share price is likely to be higher then versus now. Or in other words, dips can and perhaps should be bought.
