Oracle (ORCL): It’s These 3 Catalysts Working in Concert That Drive Our Bullishness!

Oracle’s Q1 FY2025 results showcased strong cloud-driven growth, with revenue reaching $13.3 billion, a year-over-year increase of 8% in constant currency. Cloud infrastructure revenue surged 46% to $2.2 billion, driven by heightened demand for OCI services and the expanding deployment of NVIDIA GPU clusters for AI model training. Cloud services and license support remain a key growth engine, generating $10.5 billion, up 11% year-over-year. Despite this, sequential revenue and EPS declines point to challenges in scaling operations, particularly in Oracle’s legacy businesses. Non-GAAP EPS came in at $1.39, up 17% year-over-year, but management guided for a modest increase in Q2 EPS between $1.42-$1.46, reflecting 6%-10% growth. Oracle continues to emphasize its multi-cloud strategy, with partnerships spanning AWS, Microsoft Azure, and Google Cloud, positioning the company to capitalize on cloud database and infrastructure demand. Oracle’s remaining performance obligations (RPO) rose 52%, with cloud-related RPO comprising over 80%, underscoring robust future demand. However, with capital expenditures projected to double in fiscal 2025, pressure on margins remains a concern. While management expects long-term benefits from scale, the company must navigate short-term execution risks as it expands cloud capacity. Looking forward, Oracle’s investment in AI capabilities, cloud infrastructure, and SaaS applications, combined with its strategic multi-cloud partnerships, position the company to capitalize on significant growth opportunities in the evolving cloud landscape. With the company projecting 7%-9% total revenue growth and 24%-26% cloud revenue growth, Oracle’s trajectory is promising. Oracle’s Q1 FY2025 results reflect strong cloud demand, with RPO exceeding $99 billion, up 52% year-over-year, driven by multi-cloud strategies and AI workloads. Cloud services revenue grew 46% to $2.2 billion, supported by the expansion of OCI capacity and partnerships with AWS, Azure, and Google Cloud. Oracle’s cloud-based RPO now represents nearly 75% of total RPO, showcasing growing interest across diverse industries and geographies. Further, as we move the company's Analyst Day , we see management’s confidence is underpinned by three core drivers: Best-in-class cloud technologies, particularly AI-enabled solutions and Oracle's multi-cloud flexibility, which attract diverse customer bases across geographies; Product differentiation, evident in the rapid customer adoption of OCI and AI-enhanced applications; and Expanding cloud capacity, with CapEx projected to double in FY2025, positioning Oracle to convert increasing demand into revenue and profit growth. Oracle’s revenue guidance for FY2026 has been raised to $66 billion, with an anticipated 16% growth rate through FY2029, targeting $104 billion in revenue and a 45% operating margin by that year. The focus on customer success, product differentiation, and expanding cloud capacity supports Oracle’s bullish outlook, while execution on these strategic drivers remains crucial for sustaining momentum. Initiation of Coverage :Earnings Review F1Q25, Forecasts,DCF, Valuation, Peer Analysis, ESG & Risks