Oracle 为多头持仓；强劲的财报表现——OCI 收入增长 121%、续约价格溢价 20%——支撑这一论点。

I felt the results were great, but the what Wall Street hates the stock. It really is interesting. After hours trading, this this stock was up about 7 or 8% yesterday after the results came out. The stock was performing well in the first couple hours of trading this morning and really fell off.

And I've I've been pouring over these results, and I'm long the stock. I also like a lot of the people at Oracle, but uh these results were good, and they were good in the places that we might have had concerns.

What would those places be? What is the growth like at Oracle at OCI, the Oracle Cloud Infrastructure, their data center business, right?

Well, the way the data center business works is they build the data center for for a customer, and then the customer moves their stuff into the data center, and they start to get paid, which is to say they put out billions, tens of maybe hundreds of billions of dollars when it's all said and done to build these data centers before they start getting paid.

What have we seen in these results? They are getting paid. The OCI revenues are up 121% on a year-over-year basis, even as they are still deeply engaged in the buildout of these data centers.

But I thought these results were cracker. I thought these results were were what we wanted to see from Oracle. The customer customers are starting to pay them for the work that they are doing in building data centers.

Um we also heard stories of of customers who are um engaging not just in using their data centers, but also in in all kinds of software, ERP, database software, even Oracle services, although those revenues were down, I think 1% on a year-over-year basis.

I thought it was a really strong quarter of uh revenue growth increasing, not just revenues increasing, but the growth rates increasing both at Oracle data centers and the overall company.

I thought it was a fantastic quarter for Oracle. The market didn't seem to think so, but the stock's down about 1% today. I just don't get it. if Oracle were Australian, they would say to the markets and investors they'd say fair crack of the sauce bottle, which means come on, fair go.

look, I I think what's going on is a translation issue. Quite seriously, I think that Oracle's trying to tell its story to to investors, and I think we're going to get a lot more of that from Oracle's AI world, which takes place in October in Las Vegas.

They're going to have their analyst day towards the end of that as they often do. Their long-time head of analyst relations, Ken Bond, announced his retirement in the conference call yesterday, or at least people were talking about it during the conference call. He's let people know, but he's a really well-respected guy and liked a lot on Wall Street. I don't think that's having an effect on the share price necessarily,

but Oracle's got [clears throat] to tell its story and prove to investors, you know, it is interesting that Oracle's become kind of the receptacle of AI doubt. That when other companies come out and announce big contracts, their stocks increase, when their stock prices increase, when when other companies come out and talk about work that they're doing in the field of AI and working with the biggest players out there, their stocks seem to benefit from these things. But when Oracle comes out and announces that they've won contracts, a lot of other companies are out there bidding for, the market seems to not like this.

I think we could all agree that they've got enough OCI business from OpenAI, but we're seeing lots of other companies coming here and use their data centers and contract with Oracle to build these things.

I you know, I thought it was interesting in the conference call to hear co-CEO Clay Magouirk talk about you know, some of these projects they expect to have some difficulties. They expect this to be hard. If it was easy, everybody else would be doing it. But they're understanding that if a plan if everything goes according to schedule, your schedule isn't tough enough. You're not planning hard enough projects.

And I see that what they're doing with their project Jupiter in New Mexico, what they're doing their giant Abilene facility, what they're doing in Wisconsin, they seem to be responding to community concerns in all the places where those concerns may be different. And that suggests that they're going to get these things done.

And there's their numbers are proving right? That's this is why we look at earnings because every quarter a company the press releases can do whatever they want in between earnings results. When the earning results are there, there's numbers for us to see.

I'm anxiously awaiting also the 10-K from Oracle that usually comes at the end of the trading day after announcing earnings. And so that's what I'll be doing this weekend cuz I'm a lot for a lot of really fun guy and digging through the these filings over the weekend.

But you know, the numbers are there and I think the numbers look really good for Oracle. well, isn't the data center buildout immune to higher rates as I've just been talking to a number of commercial real estate folks about. Um so, wouldn't the sky be the limit for Oracle? Are we worried about the cash position then compared to some of the other so-called hyperscalers and the credit rating, the negative free cash flow.

Look, it's pedal to the metal right now for the AI buildout. And I think Oracle, you know, you make hay when the sun shines.

We with Oracle, we we see they're not alone in this where they recognize that this is the moment to build out AI. And if they don't do it now, somebody else will. So, they've they're willing to take this hit to free cash. They definitely have been

Look, the the shares of Oracle are a bet that Open AI is going to pay their bills and that AI is going to be a thing in the future and the data centers are going to get built. If you don't believe those things, short this stock.

But I'm I'm I'm a believer that Open AI is actually going to raise the money to pay the bills that they might ultimately develop a profitable business, but I think that Oracle is going to end up getting paid for these projects.

There was also a was a very brief note, but it was I think it's really important for understanding this business writ large in Oracle's business specifically. They said that they are for customers who are re-signing with Oracle's data centers those CI, they are signing at a 20% premium to what they paid before. And that they are using these old chips.

Well, think about what this means. Now, a year ago or not quite a year ago, Oracle it was hidden in the in their financial filings. They said the useful life of their data center buildings and chips and computers and chips in particular one of their segments of of revenue recognition, they were going to extend that that over 6 years not 5 years suggesting that the chips were still good 6 years later not 5 years later,

But what Oracle told us in the conference call was that customers are paying 20% more to use the old Nvidia chips. That's a that really changes things when you're discounting these these financial models and you're trying to imagine what the costs are going to be 4 5 6 10 year out.

Could you know, when could Oracle's got a 20-year lease on a building and they've got a five-year deal with a customer, you're like, well, geez, what happens in year six?

What we're seeing right now, based on Oracle's results last night, is that customers are re-signing at higher rates to use old chips and that suggests this Oracle business model, this bet on data centers has been a great one already and we're starting to see those numbers.

Again, I thought this was super positive. My biggest worry, frankly, is that all the other analysts on Wall Street seem to like these results, too. Whenever I'm on the same side as all those clowns, we're better at this stuff than I am, I start to worry.

But, um I thought it was a fantastic quarter from Oracle. I thought the commentary was fantastic. The numbers look really good. I'm anxious to get my hands on that 10-K because I think we're going to see more of the same.

Yeah. Uh look, RBC uh lowered the price target but kept sector perform. Um as we mentioned earlier, we had Stifel lowering the price target as well, but they kept a buy rating. So, as we said earlier in the program, I mean, this seems to be a case of the analysts playing catch-up to some degree. I mean, a re-rating rather than turning bearish by any means. I mean, they've talked about the strong quarter over at Stifel, echoing some of your sentiment here as well.

Away from the data centers, though, I mean, there was a lot more to chew on, Corey. I mean, obviously with what they're doing with the software category, um we know uh that the layoffs um and what they're doing with uh workers has been under the microscope as well, whether they are seeing the efficiencies and the productivity. They're talking about AI agents for human resources teams. Uh they talked about a Pentagon contract as well. I mean, what are you making of all the stuff on the periphery?

Yeah, Oracle is uh uh loves telling their customer stories and love having these reference accounts and every quarter they'll send out kind of a separate press release where I get these emails about all their customer wins.

I think the focus is going to move a little bit from data center build-out into agents and what the agents can do. You know, I think one of the and it is is certainly a conversation of of everybody in in the world of AI is talking about what these agents can do. And if again, when you're when you're building financial models and you're trying to imagine how many users of a product one could have, when the users become agents, the use cases become infinite. And so the spending can become infinite. So that the growth in these things could be so much greater than any large group of humans might be able to muster here.

And we're starting again to see that in the results. A lot of the Oracle product changes on the software side have been about helping their users find easier ways to create agents. And what does that do? It drives the use of the of the Oracle software and it drives the use of data centers and it drives use of AI models, which is going to drive the use of the data centers, which is going to drive the revenues for Oracle.

And this isn't a prediction. We saw it in the results yesterday. You can see these numbers showing up for Oracle. So I think that that's why, you know, Larry Ellison, chief chief technology officer and their new CEOs and Mike Zillien and Clay Magorick really recognizing this is the moment to spend to to get in position for this.

It's a different business than the software business that's carried carried Oracle for many decades. It's also kind of a bummer to listen to conference calls and not have Larry Ellison opining and going off to in the left field on the conference calls as he has for so many years. But we're the new era era for Oracle with a new business unit in data centers. I think that's why so much of the oxygen in the room is focused on what that business is, not their great software business.