$225 BILLION!!! 

That’s how much Oracle (ORCL) has gained overnight after MISSING earnings (only slightly) but blowing out Remaining Performance Obligations (RPO) with a 359% increase to $455 BILLION! RPOs are a financial metric hat represents the total amount of contracted future revenue that has not yet been recognized. It is a key indicator of a company’s backlog and gives investors insight into its future revenue stream, especially for cloud-based and subscription services. It’s a term you may not be familiar with as it usually doesn’t matter much but THIS is INSANE!!!  

To put that number in perspective, ORCL’s TOTAL Revenue last year was $57.4Bn and they made $12.4Bn (21.6%) in profits. This year, the company expects $66.7Bn and they should make $19.4Bn (29%) in profits. So, ON TOP OF THAT, ORCL now has a backlog of $455Bn – more than 6 years worth of current revenues! 

That puts their now $925Bn valuation into perspective. Sure it’s 47.6 times current profits but they just grew 16.2% in revenues and 36% in profits in one year and, even if we just applied 36% to profits for the next 6 years, that would be $26.4Bn (2026), $36Bn, $49Bn (20x in 2028), $66.4Bn, $90Bn and $122.7Bn in 2032 and that would do very little to chew into their backlog so, I would imagine, we can expect them to use some of their profits to speed up their ability to deliver and grow even faster!  

AI Infrastructure is the new Oil but, back in the day, Oil companies were measured in Millions, this is 1,000 TIMES bigger than oil and he market is only just beginning to price in the new reality. 

“Oracle Cloud Infrastructure (OCI) isn’t just “cloud storage” – it’s the specialized computing foundation that powers the AI revolution”

Core Products Driving ORCL’s RPO:

• • AI-optimized compute instances for machine learning workloads

  • Autonomous Database services with built-in AI/ML capabilities

  • Exadata Cloud Service for extreme data processing requirements

  • Multi-year enterprise software subscriptions (ERP, HCM, SCM)

The Big Contracts: Four multibillion-dollar deals in Q1 alone, including:

• • OpenAI partnership for GPT infrastructure

  • Microsoft Azure integration deals

  • Tesla’s full-stack Oracle implementation

  • Undisclosed hyperscaler contracts

And, keep in mind, these aren’t traditional software licenses – they are multi-year commitments for massive computational capacity that competitors would be hard-pressed to match as they would have to build matching capacity IN THE HOPE that they can win business away from ORCL, who have a decade-long head start and a great reason (backlog) to bring more capacity on-line at scale.  

By the way, this is their March data – I don’t have anything more recent but it gives you the idea of the business. Oracle is selling long-term contracts for access to their Cloud Computing Infrastructure – essentially renting out space and computing power in their massive, secure data centers to companies that need to:  

• • Store and process huge amounts of data

  • Run business applications (like payroll, inventory, customer management)

  • Power AI and machine learning systems that need enormous computational muscle

  • Host websites and applications for millions of users

The $455 billion RPO represents customers who have already signed contracts saying “We’ll pay you X billion dollars over the next 5-10 years to use your cloud services.” Oracle (or their hopeful competitors) must build and operate giant data centers around the World, packed with:

• • Thousands of powerful servers (the actual computers doing the work)

  • Massive storage systems (like digital warehouses for data)

  • Networking equipment (the “highways” that move data around)

  • Cooling systems, security, backup power (keeping everything running 24/7)

  • Specialized software that makes all these computers work together seamlessly

How Oracle Can Scale This Fast

1. Financial Firepower

• • Oracle generates $20+ billion in annual cash flow

  • They can spend $15-20 billion yearly just on building new infrastructure

  • No need to wait for loans or approvals – they fund expansion from profits

2. Modular Construction

• • Pre-fabricated data center modules that snap together like giant Lego blocks

  • Automated deployment – robots and software handle much of the setup

  • Standardized designs that can be replicated quickly anywhere in the world

3. Smart Technology

• • Oracle RAC (Real Application Clusters) lets them add computing power by simply plugging in more servers

  • Autonomous Database technology that manages itself, reducing the need for human administrators

  • AI-driven optimization that automatically adjusts resources based on demand

4. Sales Focus Shift

Instead of hunting for new customers (which takes 18-24 months per deal), Oracle’s sales team now focuses on:

• • Delivering services to customers who already signed contracts

  • Expanding existing relationships (selling more services to current customers)

  • Account management rather than cold-calling

5. Proven Scaling Experience

Oracle has been doing this for decades – they know how to:

• • Predict capacity needs months in advance

  • Deploy new data centers in under 12 months

  • Migrate workloads efficiently as they expand

  • Handle massive spikes in computing demand

The Bottom Line: Oracle already has the customers, the money, the technology, and the experience to rapidly build out the infrastructure needed to deliver on their $455 billion backlog. They’re not selling dreams – they’re selling already-contracted reality and have the proven ability to deliver it.

This is no longer a traditional software company anymore – Oracle has become the specialized infrastructure provider for the AI revolution, similar to how Taiwan Semiconductor (TSM) became essential for chip manufacturing. The RPO number proves that the world’s largest technology companies have committed to Oracle as their AI infrastructure partner for the next 5-6 years. This isn’t speculative – it’s contracted reality!

For investors: This is the rare combination of massive growth, high visibility, and defendable moat that creates generational investment opportunities. The market’s $225Bn overnight reaction was just the down payment on recognizing Oracle’s transformation from legacy software vendor to AI infrastructure kingpin. It’s like having $455Bn worth of confirmed pizza orders and owning the most efficient pizza kitchen chain in the world – you just need to keep making pizzas! 🍕💻

Speaking of AI, I’ve asked Boaty to give us a rundown on the competitive landscape as I see this as a Boeing/Airbus thing where customers simply can’t wait 7-10 years for service, so they HAVE to use the competition:

So it’s going to be a massive market and we’ll be exploring the investment opportunities with our Members in the Live Chat Room and in today’s Live Trading Webinar (you can join us HERE). This is as exciting as investing in the market in 1998 – and hopefully not 2000 but AI is probably here to stay – the question is, is humanity?  

8:30 Update: Trump’s new BLS came through with a 0.1% decline in PPI  but that’s because they RAISED the July number from 0.7% to 0.9% – that’s like raising the limbo bar so the kids can just walk under… 

And, of course, keep in mind it takes 9 (NINE!) -0.1% months to erase 1 (ONE!) +0.9% months – so think about how silly it is for the markets to respond positively to -0.1% – even under the best of circumstances. The Core PPI is 0.3% – the same as last month and as was expected. Overall, the CPI for the year is 2.6% and 2.8% Core – still far ahead of what the Fed wants to see but improving a bit.  

Oil fell 2.8%, Natural Gas fell 1.8%, Machinery/Vehicles fell 3.9% – the tariffs haven’t really hit yet and, so far, the manufacturers are absorbing costs – which will end badly on their bottom lines in Q3.  

Between this number and the 911,000 downward revision to Employment yesterday, Trump’s BLS has given the Fed every reason to lower rates next week – perhaps more than 0.25% since we can now pretend there is no Inflation. This will be good for REITs and Utilities (XLU) and Small Caps (IWM) and TLT should pop as well.  

We get CPI tomorrow but expect that to confirm or “Heads are Gonna Roll” at the BLS!