Justin Sullivan Amazon (AMZN), Google (GOOG) and Microsoft (MSFT) are known as the big three when it comes to cloud computing services, seeing strong growth of at least 30%, putting them in "hyperscaler" territory. And while Oracle (NYSE:ORCL) has traditionally lagged behind that troika, Guggenheim analyst John DiFucci believes it's only a matter of time before the Larry Ellison-founded company catches up to those riv DiFucci, who on Thursday initiated his coverage on Oracle (ORCL) with a buy rating and a $107-a-share price target, noted that Oracle's (ORCL) public cloud business reached an annualized run rate of $3.2B in the company's fiscal fourth-quarter, which ended in May. Those results included $2.8B from Oracle Cloud Infrastructure and Cloud@Customer, which is growing at roughly 50% year-over-year. "We believe that OCI could experience years of hypergrowth by migrating existing Oracle on-premise mission-critical workloads (including to Cloud@Customer)," DiFucci wrote in a note to clients, adding that any further penetration in a broader market would be seen as "an added benefit" and result in incremental gains for both the company's earnings and stock price. DiFucci noted that Oracle (ORCL), to its detriment, has been seen as having "limited success" and is just a "stagnant database company." However, DiFucci said it looks as if the company is on the verge of an inflection point, due to increased autonomous database adoption, which could lead to more cloud adoption. Since Oracle's (ORCL) core business still accounts for nearly half of its total revenue, and roughly two-thirds of its operating profit, any acceleration in the database could drive mid-single digits revenue growth and double-digit profit growth, DiFucci said. In addition, DiFucci noted that Oracle's (ORCL) recent $28B acquisition of Cerner could be "the beginning of a new consolidation playbook," with Oracle acquiring on-premise companies to have them transition to the Oracle Cloud. DiFucci noted that if 5% of Cerner's support revenues moved annually, Oracle (ORCL) could see roughly 0.3% of growth to fiscal 2023 revenue. Oracle (ORCL) closed on its Cerner acquisition in June. It was recently reported that Microsoft (MSFT) has reached out to Oracle (ORCL) and other cloud service providers to speak to the U.S. government and spread its contracts to curb Amazon's (AMZN) dominance in the space.
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