- Oracle promoted insiders Clay Magouyrk and Mike Sicilia to co-CEOs as part of a strategic shift toward AI infrastructure and solutions
- The company recently reported strong financials, including a $455 billion backlog and a $300 billion OpenAI deal to build 4.5GW of U.S. data center capacity
- Analysts see the leadership change as a sign Oracle is now too large and complex for a single CEO, especially with its growing AI ambitions
The changing of the guard in Oracle's CEO office reflects a new direction, as the company reinvents itself as an AI infrastructure and solutions company.
Oracle on Monday announced the promotion of two insiders to the roles of co-CEO: Clay Magouyrk, previously president of Oracle Cloud Infrastructure (OCI) and Mike Sicilia, previously president of Oracle Industries. Magouyrk and Sicilia succeed 11-year CEO Safra Catz, who will now serve as executive vice chair of the Oracle Board of Directors.
Magouyrk joined Oracle in 2014 from Amazon Web Services. As a founding member of Oracle's cloud engineering team, Magouyrk oversaw the building and implementation of OCI Gen2, the company's cloud infrastructure platform for hypercale public cloud and gigawatt AI training. Sicilia joined Oracle through the 2009 acquisition of Primavera Systems. More recently, Sicilia's team at Oracle added AI agents to Oracle industry application suites, including communications, healthcare, banking, utilities, hospitality and retail, according to Oracle.
Catz has worked at Oracle for 26 years, promoted to co-CEO in 2014, alongside Mark Hurd. She became sole CEO after Hurd died in 2019.
Larry Ellison, Oracle's chairman of the board and chief technology officer, credited Catz with leading Oracle's transition to a "hyperscale cloud powerhouse."
Catz finishes her tenure as CEO following a great quarter, as the company reported remaining performance obligations — contracted revenue that had not yet been recognized — of $455 billion, up 359% year-over-year for the quarter ending Aug. 31. That includes an OpenAI deal with Oracle to develop 4.5 gigawatts of U.S. data center capacity.
Big AI bets, big questions
The five-year $300 billion OpenAI deal raises questions, such as how OpenAI plans to pay, as it's only expecting to bring in about $13 billion in revenue this year and does not expect to turn a profit until 2029.
Magourk will receive a stock package worth $250 million, while Sicilia will receive a $100 million package, according to an SEC filing.
"The crux of this announcement is Oracle’s re-invention as an AI-infrastructure and solutions company," said Balaji Abbabatulla, Gartner VP analyst and Oracle lead vendor analyst. "By building a two-layered AI leadership structure, Oracle appears to be simultaneously building AI infrastructure and AI industry solutions that will leverage the infrastructure. This strategy will enable Oracle to target different customer segments through specific business strategies for AI infrastructure and solutions. It differentiates Oracle from other strategic cloud platform service providers who are primarily focused on a cloud infrastructure platform strategy."
Jack Gold, president and principal analyst for J.Gold Associates, said, "To some extent, I see this as an admission that Oracle is now bigger than one CEO can manage, especially since they are playing in two huge markets — first their traditional software market, but increasingly trying to be a major cloud hyperscaler player for AI."
That AI hyperscaler market requires focused leadership at the top that can cut through bureaucracy, Gold said.
Co-CEOs can specialize for growth
"Oracle has long insisted that its ability to offer (a) cloud infrastructure and (b) cloud databases and (c) cloud applications and (d) vertical-industry applications creates more business value for customers because all of those pieces, when applied together, are optimized for outcomes no other tech vendor can match," said Bob Evans, analyst and founder for Cloud Wars. "Oracle is a very large and fast-growing company, and the co-CEO model enables both Magouyrk and Sicilia to ensure their areas of specialty continue to thrive while also giving them the massive opportunity to build the AI-powered industry-specific solutions of the future."
The transition is not reflective of any loss of confidence in Catz, Gold said. "Safra has done quite well and has been in that position for several years. Just like Ellison, I think it was just time to move up and make room for others," he said. Abbabatulla agreed. "We should expect to get more clarity about Safra’s future with Oracle over the next few days and weeks."
"Safra Catz has been working 80-hour weeks at Oracle for 26 years and has accomplished everything a business executive could possibly achieve: massive valuation increase during her tenure, market leadership in vital categories, fabulous innovation pipeline for the future, and an extremely strong leadership team," said Evans who served as Oracle's senior VP, communications, and chief communications officer, 2012-2017.
Photo source: By Håkan Dahlström - originally posted to Flickr as Oracle Headquarters Redwood Shores, CC BY 2.0, Link