Melius' Ben Reitzes reiterates buy rating reflects revenue growth in Oracle

Oracle's Growth and Valuation - Melius Research raises Oracle's price target to $370, reiterating a buy rating [1] - Oracle's growth is expected to significantly increase in FY28, potentially exceeding 50% [3] - Oracle's valuation is considered cheap, trading at under 30 times FY28 earnings with a 50% revenue growth inflection [4] AI and Infrastructure - AI inferencing is creating a "razor and blade" model, driving significant demand for cloud and chip infrastructure [8] - Data center capex is projected to reach $3 to $4 trillion by the end of the decade, indicating substantial industry growth [9] - The industry is seeing a significant opportunity in AI, with potential for a powerful inferencing halo effect [10] Risks and Dependencies - A key risk is the dependence on OpenAI's financial stability and ability to secure funding, particularly from SoftBank [5][7] - The realization of Oracle's RPO (Remaining Performance Obligation) is contingent on OpenAI's success [5][7] - There are concerns about the negative mix shift towards lower margin business [3]