Oracle Inc

A further analysis of the results

A further analysis of the results

The Oracle stock rose almost 40% intra-day after the results. To say the least this not normal. It led to a lot of comments that equity analysts and investors are not doing a good job and need new models to value AI stocks. The implication is the new valuation tools are needed as this time is different

The quarterly number were lacklustre but what was the number on the order book as measured by the Remaining Payment Obligation (RPO)

The RPO increased by $317bn to $455bn.

The company said

"We have signed significant cloud contracts with the who's who of AI, including OpenAI, xAI, Meta, and many others,".

“"We signed four multibillion-dollar contracts with three different customers in Q1,"

The first statement says “many others” but the second statement says three different customers. Both those statements cannot be true.

On the back of these orders, Oracle was emboldened to forecast revenues up to 7 years ahead.

"We expect Oracle Cloud Infrastructure revenue to grow 77% to $18bn this fiscal year — and then increase to $32bn, $73bn, $114bn, and $144bn over the subsequent four years,"

Is this optimism justified?