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RBC's Rishi Jaluria on under-the-radar AI plays outside of Oracle and Microsoft
Youtubeยท2025-09-10 18:08

Core Viewpoint - Oracle's long-term growth potential may be hindered by power supply issues, necessitating significant investments in energy to meet its ambitious revenue targets for the cloud business by FY30 [2][4]. Group 1: Oracle's Growth and Power Supply - Oracle's guidance includes a projected $145 billion in OCI revenue by FY30, but the sustainability of this growth is questioned due to potential power supply constraints [2][4]. - Competitors like Microsoft are already investing in alternative energy sources, indicating a trend that Oracle may need to follow to secure its growth [3][4]. - The need for a cohesive strategy regarding power sourcing is emphasized, as Oracle's long-term guidance may not account for future energy demands [4]. Group 2: Revenue Quality and Capacity Concerns - Oracle benefits from excess GPU capacity, but there are concerns about future capacity constraints that could impact its competitive position [7][8]. - The quality of revenue growth is under scrutiny, with some margins potentially being negative for certain use cases, raising questions about the overall profitability of Oracle's cloud business [5][8]. - The shift in power dynamics from inferencing to fine-tuning could provide some margin uplift, but evidence is needed to support the notion of a highly profitable business model [8]. Group 3: Competitive Landscape and Alternatives - Microsoft is highlighted as a preferred investment due to its higher quality AI revenue generation across various layers, contrasting with Oracle's current strategy [9][10]. - Other companies like MongoDB, HubSpot, and Intuit are identified as under-the-radar opportunities to capitalize on the AI trend, suggesting a broader competitive landscape beyond Oracle and Microsoft [11][12].