Behind Larry Ellison’s Best Investment Ever

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Larry Ellison, the man behind cloud giant Oracle ( NASDAQ:ORCL ), has been quietly climbing up the net worth standings in recent years, surpassing the likes of Warren Buffett and Jeff Bezos en route to becoming the world's second richest person. Indeed, if you haven't checked in with the Forbes Billionaires List , it may be somewhat surprising to see Mr. Ellison so high in the rankings, second only to Elon Musk.

With an estimated net worth of more than $206 billion at the time of writing, Ellison has a realistic shot of becoming the world's richest if Oracle can really thrive in the artificial intelligence (AI) age.

• Larry Ellison slowly and steadily rose to become the world's second richest man, thanks to his bet stake in Oracle.
• Oracle stock doesn't look done yet, not while it hits the accelerator on generative AI.
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Larry Ellison still owns a sizeable stake in the firm he helped found many decades ago. Reportedly, he still owns a massive Oracle stake in the ballpark of 40-42%. Though the man hasn't been CEO of the company in close to a decade, he's still hung on to many of those shares. Perhaps it's Ellison's ability to hold on for the long term that's allowed him to keep climbing well after he left the helm.

Though Ellison has placed smart bets on more firms than Oracle, the cloud juggernaut remains, by far, his best investment. In this piece, we'll dig a bit deeper into Oracle and whether investors should buy the stock as it plays the long game in the AI rush.

Indeed, the cloud giant has made the right bets to become an early gainer from the so-called AI race. And as it moves forward to seize the long-term AI opportunity at hand, perhaps Larry Ellison's best investment ever may have the legs to mint him as the world's richest man.

Oracle Stock Boomed in the Internet Age. Now, It's Ready to Seize the AI Boom!

Oracle rose to fame as a provider of relational database management systems (RDBMS) back in the 1970s and 1980s. As one of few folks who saw the opportunity to be had from the rise of the internet, Ellison positioned his firm in a way to profit from the dot-com boom and the rising demand for RDBMS it entailed.

Though the dot-com bust hit hard, Oracle rose from the rubble to make new highs nearly 17 years later. Undoubtedly, Oracle's prowess in the cloud was a major reason it was able to recover from a dot-com crash that some may have viewed as impossible to recover from.

More recently, it's AI that's helped ORCL stock melt up in parabolic fashion to jaw-dropping new highs. In the past two years, shares of the tech titan have risen over 171%, playing a huge part in the swelling of Ellison's net worth.

The big question is whether the AI boom will bring forth more gains for Oracle or if much of the AI growth is already baked in, paving the way for a potential dot-com-era-esque crash. Though chasing a stock that's soared 171% in two years can lead one to feel the full force of a sell-off, I just don't see the stage set for a repeat of what happened nearly 25 years ago.

Believe it or not, Oracle Still Looks Cheap for its Growth.

First, Oracle stock isn't obscenely expensive at 43.8 times trailing price-to-earnings (P/E) and 27.1 times forward P/E. In fact, the stock still seems too cheap, given the company's AI growth drivers and its undervaluation relative to most other AI-savvy tech companies. The cloud applications business is really heating up, thanks to the addition of generative AI.

Additionally, smart partnerships and acquisitions (Oracle took a partial stake in Canadian AI firm Cohere) seem to be strengthening the cloud giant's AI springboard. More recently, the cloud giant bet more than $6.5 billion to build a public cloud region in Malaysia to help it get up to speed with AI. Such a deal could mean big things for Oracle.

The Bottom Line

Oracle seized the internet and cloud opportunities. And now, it's looking to seize the AI one, which may just keep ORCL shares (and Larry Ellison's net worth) moving higher over the next decade. It's Ellison's best investment ever, and many Wall Street analysts agree that the stock is still worth buying right here at just shy of $170 per share.

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