ab 10 December 2025 Global Research Oracle Corporation A Bit Light But 2H Ramp Remains Compelling Summary Oracle posted 2Q/Nov results (13% c/c revs growth, 66% cloud infra growth) that fell slightly short of investor estimates, as did the messaging around leverage/financing, but in our view the conversion of the massive $523b deal backlog to high revs growth in 2H/ FY27 is compelling enough that we're sticking with our Buy rating. Topline/Backlog Story The conversion of backlog/capex/revs to bottom-line re ...

A measure of Oracle Corp.’s credit risk reached a fresh 16-year high Thursday, after the database company’s higher spending on data centers and other equipment raised fresh doubts about how quickly the firm can generate profit from its huge artificial intelligence investments. The cost of protecting the company’s debt against default for five years rose as much as 0.17 percentage point to around 1.41 percentage point a year, the highest intraday level since April 2009, according to ICE Data Services. The ...

Core Insights - Oracle's second-quarter fiscal 2026 results showed mixed performance, with shares dropping 11% pre-market despite strong cloud growth and a record backlog [1] - Total revenues reached $16.1 billion, a 14% increase in U.S. dollars, but fell short of estimates by 0.55% [1][5] Financial Performance - Cloud revenues surged to $8 billion, up 34% in U.S. dollars, with cloud infrastructure revenues increasing 66% to $4.1 billion [2] - Software revenues declined by 3% to $5.9 billion, indicating challenges in legacy products [2] - Free cash flow was negative $10 billion due to capital expenditures of $12 billion, with operating cash flow at $2.1 billion [4] - Non-GAAP earnings per share were $2.26, a 54% increase, while GAAP earnings per share reached $2.10, up 91% [5] Backlog and Future Guidance - Remaining performance obligations (RPO) rose to $523 billion, a 438% year-over-year increase, with a 40% growth expected to be recognized within 12 months [3] - Oracle anticipates $4 billion in additional revenues for fiscal 2027 from the backlog [3] - For the fiscal third quarter, Oracle projects cloud revenue growth of 37% to 41% and total revenue growth of 16% to 18% [6] Strategic Initiatives - The company is focusing on its AI data platform and multicloud database partnerships, with multicloud database business growing 817% [7] - Oracle's databases are positioned for AI applications, leveraging high-value private data [7] Competitive Landscape - The cloud infrastructure market is highly competitive, with Amazon Web Services holding approximately 30% market share, followed by Microsoft Azure and Google Cloud [12] - Oracle competes through its multicloud database offerings embedded in major cloud platforms [12] Valuation Metrics - Oracle's stock is trading at a forward Price/Sales ratio of 8.42x, above the industry average of 7.61x, indicating a premium valuation [13] - The company carries a Value Score of D, reflecting stretched valuation metrics [13]

Oracle Corp. (NYSE:ORCL) is doubling down on its artificial intelligence (AI) ambitions, forecasting a $15 billion increase in capital expenditures for fiscal 2026 to fulfill a record-breaking $523 billion backlog, along with an additional $4 billion in sales by fiscal 2027 amid faster backlog conversion. The Cost Of AmbitionThe database giant reported a mixed second quarter, beating earnings estimates with a 54% jump in adjusted EPS to $2.26, but missing revenue expectations at $16.06 billion.However, the ...

Key Takeaways Oracle is scheduled to report earnings after the closing bell Wednesday, with analysts anticipating growing revenue and profits. Options pricing suggests traders expect Oracle's stock could move nearly 10% in either direction after its results. Oracle (ORCL) is set to report its latest quarterly results after the market closes on Wednesday, with traders expecting a big move in the tech giant's stock following the report. Options pricing suggests traders anticipate the stock could swing ne ...

Core Insights - The stock market experienced a sell-off driven by concerns over an AI bubble, affecting various equities, including those not directly linked to the AI sector [3][7] - The concept of "oversold" stocks suggests a potential for price reversion, particularly for companies with strong fundamentals and competitive advantages [4] - Technical indicators like the Relative Strength Index (RSI) are useful for identifying potential stock turnarounds, with readings below 30 indicating oversold conditions [5] Company Analysis - Oracle Corporation is positioning itself as a significant player in the AI industry, leveraging its cloud infrastructure and enterprise software for AI applications [6] - Despite being primarily known for cloud software and databases, Oracle's recent price correction is viewed as excessive, suggesting potential for recovery [6] - Analysts' 12-month price targets for Oracle and Super Micro Computer indicate substantial upside potential, as both stocks are currently in oversold territory [5][7]

Core Insights - Oracle Corporation's shares have declined by as much as 37% from their record high in September due to investor concerns over its debt-financed expansion into artificial intelligence infrastructure [1] - The company plans to add approximately $38 billion in debt to fund its cloud and AI initiatives, leading to weaker bond prices and higher yields [2] - There is a growing concern in the market regarding credit risk, as indicated by the increased use of 5-year credit-default-swap contracts [3] Debt and Credit Concerns - Wall Street analysts express fears that the borrowing to support AI infrastructure may strain Oracle's cash flows and delay returns, with over half of fund managers identifying AI spending as a top market risk [4] - Rising credit spreads and bond yields have negatively impacted investor sentiment, raising concerns about execution risks and the timing of returns from AI investments [7] - Despite remaining investment grade, Oracle's credit-market performance is being closely monitored as a potential indicator of the financial health of the broader AI infrastructure sector [8] Strategic Shift and Market Potential - Oracle is transitioning into AI compute contracts that are structured as non-cancelable and non-modifiable, ensuring stable cash flows and cost visibility [5] - The company is pivoting towards data centers and cloud infrastructure designed for AI workloads, financed through newly issued debt [5] - The total addressable market for AI infrastructure is projected to reach $200 billion in annual spending by 2028, with a 42% compound annual growth rate (CAGR) over five years [6]

Core Insights - MongoDB's CEO Dev Ittycheria will retire after 11 years, with Chirantan "CJ" Desai set to succeed him effective Nov. 10 [1][2] - Desai brings over 25 years of experience in cloud infrastructure, AI, and enterprise software, having previously served at Cloudflare and ServiceNow [2][3][4] - MongoDB anticipates exceeding its revenue guidance for Q3 FY 2026, with a strong focus on AI applications driving growth [6][7] Leadership Transition - Ittycheria will remain on MongoDB's board and act as an adviser to Desai following his retirement [2] - Desai's appointment follows his successful tenure at Cloudflare, where he led product strategy and execution [3][4] Strategic Focus - The company sought a successor with expertise in cloud infrastructure and AI to guide its growth trajectory [3] - Desai emphasized MongoDB's potential in AI-driven applications and the importance of customer engagement and product innovation [5] Financial Performance - MongoDB reported a 24% year-over-year revenue increase in its latest earnings report, attributed to new customers utilizing its database for AI applications [7]

Summary of Conference Call on Greater China IT Services and Software Industry Industry Overview - The focus is on the Greater China IT Services and Software sector, particularly in the context of trade tensions and software localization themes [1][3][4]. Key Points 1. **Impact of US Export Controls** - The US has announced export controls on critical software, particularly affecting areas like Electronic Design Automation (EDA) and industrial software [2]. - However, these controls are not expected to significantly improve the fundamentals of China's software industry, which is facing tight domestic budgets and macroeconomic deflation [4]. 2. **Software Localization Sentiment** - There is an anticipated positive stock market sentiment around the software localization theme (Xinchuang) for A shares and H shares, driven by southbound capital flows [3]. - This segment is currently under-owned by institutions due to poor business models and inconsistent earnings, indicating high beta and elasticity [3]. 3. **Current Market Dynamics** - Despite the push for software localization, many Chinese customers can continue using existing US software as long as it is locally deployed, reducing the urgency to switch [4]. - The Chinese government has been proactive in promoting software localization, leading to an increase in local vendors' market share over the past five years [4]. 4. **Potential Trade Negotiations** - The situation may evolve rapidly due to potential trade negotiations between the US and China, which could impact the software industry [5]. 5. **Related Companies** - Companies mentioned in relation to the software localization theme include Empyrean, Kingsoft Office, Yonyou, Baosight, and Kingdee [5]. - No stocks under this theme are currently rated as Overweight by Morgan Stanley [5]. Additional Insights - The report highlights that the software localization dynamics vary across different sub-markets, with specific players identified in the sector [10][12]. - The overall industry view remains cautious, reflecting the challenges posed by external trade policies and internal economic conditions [6]. - Analysts express concerns that the US export controls may not effectively address the core issues facing the industry, such as fiscal constraints and the availability of free alternatives [4]. This summary encapsulates the critical insights from the conference call regarding the Greater China IT Services and Software industry, focusing on the implications of US export controls, market sentiment, and the ongoing push for software localization.

Core Viewpoint - The market is overly optimistic about Oracle Corporation's projected $10 billion revenue from OpenAI, with skepticism regarding the realization of this revenue and the ability of OpenAI to afford it [1][2][3] Company Analysis - Oracle Corporation is recognized as a leader in the enterprise software market, particularly in database, infrastructure, application software, and cloud-based services [3][4] - The company benefits from a strong market position, a large and experienced sales force, and a founder-driven management team that focuses on maintaining a robust intellectual property portfolio [3] - Oracle has a significant installed client base with high switching costs, achieving renewal and retention rates in the mid-90% range [3] Industry Context - There is uncertainty about the actual revenue generation from AI technologies, with concerns that many companies are not yet realizing substantial income from AI [2][3] - The potential for big tech companies to outsource their data center needs to Oracle is questioned, as these companies may have the capability to manage their infrastructure in-house [2][3] - The ongoing growth in data storage and enterprise application software, along with the shift to cloud-based solutions, positions Oracle favorably in the market [4]