Core Viewpoint - Citi maintains a Buy rating on Oracle (ORCL) but lowers the target price from $415 to $375, while still projecting a high return of 81% [2][8] Financial Projections - For FY2025, Oracle's EPS is projected at $6.42, with quarterly estimates of $1.39, $1.47, $1.86, and $1.70 [2][8] - FY2026 EPS is expected to be $6.80, with quarterly estimates of $1.47, $1.62, $1.72, and $1.98 [2][8] - FY2027 EPS is projected at $7.93, with quarterly estimates of $1.70, $1.89, $2.05, and $2.30 [2][8] - FY2028 EPS is expected to reach $10.65, with quarterly estimates of $2.15, $2.51, $2.79, and $3.21 [2][8] Market Sentiment and Risks - Investor sentiment has quickly deteriorated from a record Q1 and optimistic analyst day [3][9] - Concerns regarding Oracle's debt default risk are viewed as overstated, with rising CDS prices reflecting broader market hedging sentiment rather than fundamental deterioration [3][9] Capital Expenditure and Growth Expectations - Citi raises FY26 CapEx expectations to over $40 billion, compared to consensus of $35 billion, anticipating AI OCI capital expenditures to rise to an annual level of $60 billion to $70 billion in the coming years [5][11] - A VAR channel survey indicates mixed signals, with dealer quota attainment rising from 60% to 66%, but NTM growth expectations slowing by approximately 2.5 percentage points to around 2% [5][11] Valuation Adjustments - The target price reduction is primarily due to a compression in valuation multiples, decreasing from a previously implied higher multiple to 27.5x FY28E Non-GAAP EPS, reflecting market caution regarding profitability in a high CapEx environment [5][11] Key Data Point - Citi predicts that the remaining performance obligations (RPO) for F2Q will reach an astonishing $600 billion, exceeding consensus estimates by 20% [2][8]