Oracle Stock: Can Oracle Corporation Take Down Amazon.com, Inc.?

Oracle StockLooking Ahead for ORCL Stock

In recent years, Oracle Corporation (NYSE:ORCL) co-founder Larry Ellison has seemed more concerned with a playboy lifestyle than his company, but now his attention is back on Oracle stock (ORCL). He’s even taking shots at Amazon.com, Inc. (NASDAQ:AMZN).

“Amazon’s lead is over. Amazon is going to have serious competition going forward,” Ellison said during his Sunday-night keynote speech at Oracle’s annual conference for developers, partners, and customers. “We now have a tech advantage over Amazon in infrastructure as a service.”(Source: “Oracle’s Larry Ellison Compares Company’s Offerings to Amazon’s,” The Wall Street Journal, September 18, 2016.)

The billionaire playboy voiced his optimism over and over again, arguing that Oracle could poach the top spot in cloud computing. That’s a tall order, considering that Amazon held that title every year since … well, always. Cloud computing only came into existence recently and Amazon took an early lead.

Yet Ellison, Oracle’s executive chair and chief technology officer, shouldn’t be underestimated. He’s a self-made billionaire, much like Amazon CEO Jeff Bezos, and has a host of side projects. Both men have tested their survival skills in the entrepreneurial wilderness. Both flourished and built their own fiefdoms. It could be interesting to see them go head-to-head.

Right now, ORCL stock is still a play on enterprise software licensing. Private servers are still the biggest revenue draw for Oracle stock, but the company intends to blend that mix in the coming years. According to Ellison, customers will be able to migrate to cloud-based applications “with the click of a button.” (Source: Ibid.)

“There is going to be a 10-year period of coexistence where you have data centers [run by customers] and applications in the cloud,” he said. “It’s very important that those things coexist gracefully.” (Source: Ibid.)

Ellison said that Oracle’s infrastructure as a service is cheaper and faster than Amazon’s. It’s clear the company wants to cast its ORCL stock as an upstart in the cloud computing field, but markets will need some convincing.

Morgan Stanley (NYSE: MS) estimates that “Amazon Web Services” (AWS) made $7.9 billion in sales last year. AWS was number one on Morgan Stanley’s list, followed (at a distance) by Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc (NASDAQ:GOOG), which were eight and 16 times smaller, respectively. Oracle stock barely even registered on their list.

That’s not to mention the explicit skepticism voiced by Wall Street analysts. Deutsche Bank AG analyst Karl Keirstead wrote in a report Friday, “We don’t believe [Oracle’s infrastructure-as-a-service offering] will be competitive anytime soon.”

Most people on “the Street” still think of Oracle stock as a minnow compared to the 800-pound shark that is Amazon. Ellison will have to work hard to change that narrative. Maybe he should consider skipping the next America’s Cup.