Citi on Oracle Corporation (ORCL.K): Securing AI Compute and Clearing the Deck for Investor Day
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Citi argues Oracle's (ORCL.K) FQ1 results secured AI compute and cleared the decks ahead of Investor Day, supporting its Buy rating, US$330 target price (~30x FY28 P/E) and a positive Catalyst Watch (upside) expiring November 24, 2026. Revenue of US$19.3 billion grew 30% in constant currency, beating the consensus 28%, with total cloud revenue accelerating to +61% and OCI up 121%—a 29-point acceleration—while SaaS returned to above 10% growth and EPS of US$1.92 rose 30%, 9/11 points above Citi/consensus. Oracle signed over US$30 billion of new AI cloud contracts, lifting RPO 209% year-on-year (+US$26 billion sequentially); the incremental US$40 billion of RPO capacity needs no incremental financing, and roughly half of RPO should convert to revenue within 36 months. The quarter delivered more than 300,000 GPUs and 850MW of new data-center capacity, with legacy GPUs commanding a 20% premium in renewal and resale contracts. FQ2 capital expenditure of US$28.5 billion (+235% y/y) far exceeded the +115%/+111% Citi/consensus growth forecasts, with free cash flow at –US$5.4 billion. Management essentially reaffirmed the US$90 billion revenue goal and raised EPS guidance just US$0.05 to US$8.10—a framework Citi views as conservative, positioning Investor Day and AI World for upward revisions. Citi models FY27 revenue of US$90.41 billion, EPS of US$8.25 and capex of US$94.20 billion.
Key exhibits
Exhibit 1
Exhibit 2
Exhibit 3
