- 3Q26 revenue met our expectations while PATMI exceeded, 9M26 and PATMI at 73%/86% of FY26e forecasts. Revenue rose 22% YoY, led by Oracle Cloud revenue growth (+44% YoY).
- Strong revenue visibility with future contracts rising to US$553bn (3Q25: US$130bn). FY27e revenue guidance has been raised to US$90bn. The Stargate AI campus in Abilene, Texas, remains on track to reach 1.2 GW of capacity. Two data centres are operational and running Oracle OCI workloads, with the remaining six expected by mid-2026. Multicloud business expects 71 data centres to go live across hyperscalers. The 15% stake in TikTok US is expected to start generating investment income in 4Q26.
- We maintain a BUY rating with a lower DCF target of US$275, as we expect CAPEX to rise gradually to US$90bn in FY30e (for existing contracted revenue) after exceeding expectations in FY26e. No changes to our FY26e estimates, including WACC and g. Forward PE of 30.0x is slightly above the 28.4x 1-year average, but justified by acceleration in the later years. We expect Oracle’s software and cloud remain resilient, supported by regulatory compliance, industry expertise, and embedded AI agents at no cost. The US$45bn capital raised will support the FY26e CAPEX (US$50bn). We believe bond maturities at ~5% yield in 2029 is manageable, supported by expected 48% YoY operating income growth. The new funding model will ease CAPEX and boosts free FCF via customer-funded hardware and upfront payments (US$29bn contracted in 3Q26).
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