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1Q27 result met our expectation, with revenue and PATMI at 22%/23% of our FY27e forecasts. Revenue rose 30% YoY, led by Cloud infrastructure growth (+121% YoY). We expect earnings to be backloaded into a stronger 2H27e on the data centre ramp-up.
- Group revenue is expected to accelerate to 34% YoY (FY26: 16%), driven by Cloud Infrastructure revenue surging 109% to US$38bn and accounting for 42% of group revenue. Capacity deployment is accelerating, with 850MW of AI compute capacity added in 1Q27, nearly matching FY26's full-year 1.2GW. OpenAI-related capacity is already being monetised, with the majority of the US$300bn OCI commitment expected to ramp from 2027, while a potential IPO could strengthen its funding capacity. Meanwhile, Stargate remains on track with the Abilene campus 75% complete and operational, supporting Oracle's backlog conversion and long-term growth visibility.
- We maintain a BUY recommendation with a lower DCF target price of US$225 (prev. US$237), due to a higher share count by ~100mn following Oracle's recent ATM (At-the-Market) equity issuance to help fund its aggressive AI infrastructure and data centre expansion. Our FY27e estimates remain unchanged, incl. revenue and CAPEX (net cash outlay). WACC and g are also unchanged. Customers likely continue to favour Oracle’s end-to-end stack (infrastructure to cloud). US$105bn in bookings under the new funding model over three quarters (16% of RPO) underscores strong customer preferability for Oracle despite prepayments and bring-your-own-hardware requirements.
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