TMTB Morning Wrap
QQQs -25bps to start the day as yields fall 6-7bps across the curve. BTC -1.5%.
AMD/ANET AI days today.
We’ll get to ORCL first then the rest.
Let’s get to it…
ORCL +9%: Solid Q4 - Cloud / OCI Acceleration on Tap for FY26 as RPO guided to +100% in FY26
Whatever nitpicks there were to Q4 (slower OCI revs) were overshadowed by a massive Fy26 guide of 40%+ cloud growth (street at ~34%) / 70%+ IaaS growth vs street in low 60s / 100%+ RPO growth to >$275B.
Mgmt said RPO guide does not count on a big windfall of Stargate related contracts (incorporates some).
Capex guide of $25B vs street around $20B
Other than slower IaaS growth, Q4 was actually pretty solid showing accelerating SaaS and Fusion growth:
Total Revenue $15.90 B (+11 % y/y) vs Street $15.59 B (+9 %)
Cloud Revenue (IaaS + SaaS) $6.7 B (+27 % y/y) vs Street ≈ $6.74 B (+27 %); buyside looked for the same 27 % so essentially in-line.
IaaS $3.0 B (+52 %) vs Street +54.5 % and buyside +55%+
SaaS $3.7 B (+12 %) vs Street/buyside +11% …Fusion SaaS +22%
Remaining Performance Obligations $138 B (+41 %) vs buyside >40 %
Larry and Safra sounded bulled up as expected and talked up AI demand on the call.
Key quotes:
As we bring more capacity online, our revenue and profit growth will further accelerate.”
"still in a position where our supply is not meeting our demand. We actually currently are still waving off customers or scheduling them out into the future so that we have enough supply to meet demand. This is a situation that we have not seen in our history"
“‘Stargate is still in formation’… many partnerships are part of this enormous growth rate… if Stargate turns out to be everything advertised, we’ve understated our RPO growth”
“We recently got an order that said ‘we’ll take all the capacity you have’… unprecedented except for all the other gigantic contracts”
“no, we’re not having any trouble getting GPUs”
“People are calling up and asking us, ‘please, can you find us more capacity?… we’ll take it wherever.’”
Bull vs Bear Debate:
I think Rocha at Wells put it well this morning on the key debate: “Does the Cloud and Total Revs reaccel outweigh any compression in OM, EPS or FCF given the backdrop in software currently.”
Our view: as long as AI vibes stay positive, ORCL remains a buy the dip the stock and valuation skews to the upside while OM/Capex concerns will be put on the backburner. ORCL continues to be one our favorite sw longs in our AI beneficiary sw framework. We move it into Tier 1 from Tier 2 bucket. From our weekly a few weeks ago:
Bulls argue that Oracle has crossed the inflection they have promised for years: a backlog-driven runway, accelerating cloud mix, and differentiated cost/performance that is winning blockbuster AI-training, sovereign-cloud, and multicloud-database deals. Bulls will say that Oracle is entering a structural growth phase: record‑high RPO, >70 % OCI growth, and a uniquely profitable AI‐ready database platform position the company as a credible “fourth hyperscaler.” They view the FY26–27 revenue acceleration and large multicloud/AI contracts (e.g., OpenAI, Temu) as confirmation that demand is pulling rather than pushed, and believe margin dilution is temporary while every dollar of capex rapidly converts into recurring IaaS revenue. $9+ of EPS in FY27 at 25x+ gets you $225+. It’s one of the few stories - along with MSFT, PLTR, NET, SNOW - that are currently capturing meaningful AI demand.
Bears counter that the story leans heavily on capital-intensive, lower-margin GPU training workloads. Skeptics further debate how quickly high-profile “Stargate” contracts or multicloud database ramps will translate into profitable revenue—and whether valuation already discounts perfection after the recent rally.
Yup - the bulls have it…
TECH RESEARCH/NEWS
THIRD PARTY DATA ROUNDUP:
MSFT: Cleveland says Jun Q tracking ahead on Azure tailwinds as Copilot pipeline picks up….Hey! it’s a positive co-pilot check! Haven’t seen you in a while….just extra gravy on top of our bull case…
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