RBC on Oracle earnings and AI (with Romaine Bostick, Katie Greifeld)

Oracle's Q4 numbers were objectively strong (OCI growth 92%, RPO $638B), but the market is jittery about how Oracle will pay for CapEx, component price inflation, and concentration risk with OpenAI. The guidance for Q1 cloud revenue growth of 57% is strong, but the market needs more clarity on CapEx and diversification strategy. Oracle is most levered to the AI infrastructure trade.

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RBC 6.0
Investment Bank $1200.00B
Rishi Jaluria 8.0

RBC on Oracle earnings and AI (with Romaine Bostick, Katie Greifeld)

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Jaluria describes the market as 'jittery' around the AI trade, with Oracle's after-hours volatility reflecting uncertainty about CapEx and margins. This suggests near-term volatility for tech-heavy indices.

Asks for first impression on Oracle's Q4 numbers and guidance.

Romaine Bostick
Rishi Jaluria

These are objectively really strong numbers (RPO, OCI growth). But with a 50% bounce off the bottoms and jitteriness around AI trade and how Oracle will pay for CapEx, plus component price inflation, we need more granularity on the call.

Memory prices have gone through the roof and you've seen that show up in the hardware trade.
Asks if Oracle is still the primary beneficiary of the AI buildout long term.

Romaine Bostick
Rishi Jaluria

Oracle is most levered to the AI infrastructure trade. The percentage of incremental business from AI is meaningfully higher for OCI than for Microsoft Azure or AWS. Oracle has become a proxy for that AI buildout trade.
Asks about concentration risk with OpenAI and the arms race with Anthropic.

Katie Greifeld
Rishi Jaluria

It's a huge deal. Perceptions have shifted - OpenAI is making a comeback but Anthropic is still seen as ahead. There's also worry about margins on such a big deal with one customer. Are the incremental margins good enough? Still a lot of unanswered questions.
Asks what he is most interested to hear on the conference call.

Katie Greifeld
Rishi Jaluria

Two things: 1) Diversification strategy for OCI, especially for AI infrastructure. 2) Color around CapEx - we've seen component price inflation and hyperscalers spending the equivalent of the GDP of Sweden on hardware.
Asks where the money for this buildout will come from (debt, equity, etc.), given Oracle says it won't issue more debt in 2026.

Romaine Bostick
Rishi Jaluria

It will be a mix of all of the above: debt, special vehicles, equity issuance. Oracle is also finding efficiencies within the organization (layoffs). So a combination of all of the above.

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