Can Oracle Get Close to a $1 Trillion Market Cap Again?

It wasn't long ago when Oracle (NYSE: ORCL) was approaching a $1 trillion market cap, thanks in large part to optimism about its cloud computing business. However, the stock is down by more than 50% from the all-time high it set almost a year ago, and it currently has a market cap below $500 billion.

This dramatic drop has created a buying opportunity, and if Oracle can continue to ride the tailwinds of the AI megatrend for multiple years, it has a real shot at recovering past that peak and reaching a $1 trillion valuation for the first time.

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Cloud revenue continues to climb

Oracle's cloud segment is the most important part of the business to consider when assessing how far the stock can climb. That segment continues to do well. Oracle reported cloud revenue growth of 47% year over year in its fiscal 2026 fourth quarter. Total revenue for the company was up by 21%.

The major drag on the stock relates to Oracle's remaining performance obligations. It has $638 billion in its backlog. That's a good number on the surface since Oracle earned $19.2 billion in its fiscal 2026 fourth quarter. The issue is that its contract with OpenAI accounts for more than $300 billion of that $638 billion total.

There is a lot of uncertainty about that contract. First, in December, Bloomberg reported that Oracle was going to delay delivery of the OpenAI-related data center project by a year -- an assertion that Oracle promptly denied. According to Oracle, those data centers will be delivered on time in 2027.

Investors' bigger concern regards OpenAI's ability to pay $60 billion per year for five years to Oracle when it posted a $38.5 billion net loss in 2025. Its $40 billion in annual recurring revenue wouldn't be enough to cover that commitment, even if it operated with 100% net profit margins, and the Oracle contract is far from OpenAI's only expense.

These concerns are valid when it comes to the pipeline, but Oracle is delivering solid results right now, and it still has a lot of other customers with more reliable finances in its remaining performance obligations.

The valuation has dropped considerably

Anytime a stock goes through a deep correction, it's a good time to reassess its valuation. Although Oracle previously commanded a P/E ratio in the 50s, it only trades at a 26 P/E ratio right now. Furthermore, its price/earnings-to-growth (PEG) ratio is just 0.86. Any stock with a positive PEG ratio below 1 is generally viewed as being undervalued.

Oracle stock offers a more attractive margin of safety right now than it did a few months ago. Furthermore, if its revenue and net income continue to climb, investors should feel more willing to expand its valuations again and send it back toward its all-time highs.

The artificial intelligence boom isn't anywhere close to being over. Grand View Research projects a 30.6% compound annual growth rate for the artificial intelligence market through 2033. Oracle's cloud platform is poised to ride that wave, which could propel the company to a $1 trillion market cap.

Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.