To The Moon

Oracle's $455 Billion AI Bet Puts Cloud Rivals on Notice

We have long maintained that the highest return on investment for artificial intelligence will be realized in cloud computing. $Oracle(ORCL)$   , as the first of the "Big Five" cloud giants to report its latest quarterly earnings, has provided a stunning validation of this thesis. Its Oracle Cloud Infrastructure (OCI) posted a staggering 55% growth rate, a figure set to once again lead the global cloud market and which sent its stock soaring in after-hours trading. Let's break down what just happened.

Oracle's Monumental Quarter

Oracle's results paint a picture of a company firing on all cylinders, rapidly converting AI demand into a massive, tangible backlog.

Key OCI (IaaS) Metrics:

~Revenue: Reached $3.3 billion for the quarter, a 55% year-over-year (YoY) increase.

~Consumption Revenue: Grew even faster at 57% YoY, with demand continuing to dramatically outstrip supply. The company anticipates even faster consumption growth in fiscal year 2026 (FY26).

~Astounding Revenue Forecast: Oracle projects IaaS revenue to hit $18 billion in FY26 (+77% YoY), rocketing to $32B, $73B, $114B, and $144B in fiscal years 2027 through 2030, respectively.

The Engine Behind the Growth:

~Mega Deals: The company secured four multi-billion dollar contracts from just three clients this quarter, causing its Remaining Performance Obligations (RPO) to surge to an astronomical $455 billion, a 359% YoY increase. Oracle expects to sign more multi-billion dollar deals in the coming quarters, pushing RPO above the half-trillion-dollar mark.

~Multi-Cloud Explosion: Database Multi-Cloud revenue from partnerships with Microsoft, Google, and Amazon skyrocketed by 1,529% YoY, with sequential quarterly growth expected to continue. The footprint is expanding rapidly, with 34 multi-cloud data centers now live and another 37 under construction, for a total of 71.

~Strategic AI Positioning: OCI is aggressively capturing both the AI training and inference markets. While the training market is booming, Oracle sees the inference market as the larger long-term opportunity. Its core competitive advantages are its deep entrenchment in private enterprise databases, rapid deployment times, and high-speed network data transfer.

Broader Cloud and Investment Picture:

~Cloud Database: Revenue grew a robust 32% YoY, reaching an annualized revenue of $2.8 billion. Autonomous Database consumption revenue was up 43% YoY.

~Aggressive CapEx: Capital expenditures were $8.5 billion for the quarter, with a full-year FY26 forecast of $35 billion. Crucially, the company emphasizes that the vast majority of this investment is for revenue-generating data center equipment, not land or buildings.

~Disruptive Pricing: Oracle's "Cloud@Customer" offering can be delivered at an entry-level price that is just 1% of its competitors', a potentially game-changing advantage for enterprise adoption.

The Competitive Landscape: A Tale of the Tape

While Oracle's growth accelerates, here is where its four main rivals stood as of their most recent quarterly reports (Q2 2025).

~$Amazon (AMZN.US)$ Web Services (AWS):

Q2 Revenue: $30.9 billion, +17% YoY (growth flat sequentially).

Operating Profit: $10.2 billion, +9% YoY.

Operating Margin: 33%, a 3-point decline YoY.

RPO: $195 billion, +25% YoY.

~$Microsoft (MSFT.US)$ Azure:

Q2 Revenue: $21.7 billion, +39% YoY, marking a 6-point sequential acceleration and continuing to lead the top three in growth.

Intelligent Cloud (Segment): Revenue of $29.9 billion (+26% YoY) with operating profit of $12.1 billion (+23% YoY), both record highs.

Commercial RPO: $368 billion, +37% YoY.

~$Alphabet-C (GOOG.US)$ Cloud:

Q2 Revenue: $13.6 billion, +32% YoY, a 4-point sequential acceleration.

Operating Profit: $2.8 billion, with a record-high operating margin of 21%.

RPO: $106 billion, +38% YoY.

~$Alibaba (BABA.US)$ Cloud:

Q2 Revenue: $4.7 billion, +26% YoY, an 8-point sequential acceleration and its third consecutive quarter of double-digit growth.

EBITA Profit: Grew 26% YoY, with an EBITA margin of 9%.

RPO: $106 billion, +38% YoY.

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