Oracle Corporation
Information Technology · Software
Legacy database incumbent re-rated as fourth hyperscaler after landing multi-year, multi-billion OCI compute deals with $OpenAI (Stargate, ~$300B headline over 5y), $XAI, and others. RPO (remaining performance obligations) ballooned from ~$80B to >$450B in FY26 reporting on these contracts, structurally changing the revenue trajectory but also concentrating customer risk.
- OCI revenue growth accelerating (>50% YoY) on AI workload backlog
- $450B+ RPO provides multi-year visibility into cloud ramp
- Database moat intact; Autonomous Database + Exadata Cloud@Customer pull legacy installed base into OCI
- Capex cycle (GPU buildout) front-loads cost but locks in long-duration contracts
- Multi-cloud partnerships ($MSFT, $GOOG, $AWS) extend reach without ceding workload
- Customer concentration: $OpenAI alone is a meaningful share of incremental RPO; lab counterparty credit risk is real
- $30B+ capex 2026/27 compresses FCF; negative FCF possible in peak build years
- Power/capacity execution risk - datacenter and GPU delivery timelines slip across the industry
- Pricing on AI compute deals undisclosed; margin profile not yet visible
- Re-rating already priced in; multiple expansion did most of the recent work
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