But for these shares to continue their uptrend management has to convince investors Oracle's enterprise position is sustainable while companies embrace on-demand services like software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS). These are areas that IBM (IBM) and Microsoft (MSFT) have begun to attack.

Secondly, management must address new ways to mitigate lower-cost services from Salesforce and Workday and other open source alternatives. Last but not least, rivals like Red Hat (RHT) and to a lesser extent Citrix (CTXS) have made inroads in areas like middleware, which is the software that lies between an operating system and specific software applications.

Although Oracle still has advantages in both middleware and database markets, Oracle's name is no longer enough to win over customers. Enterprises are looking for differentiation. If Oracle can address these three areas, the stock should do well in the long term.

The bottom line is Ellison, who has executed a well-thought-out plan to turn Oracle into a cloud power, is much smarter than initially perceived. Investors would be wise not to bet against him.

At the time of publication, the author held no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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