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The company said Tuesday after the bell that it has $455 billion in remaining performance obligations, up 359% from a year earlier. Oracle now sees $18 billi

The company said Tuesday after the bell that it has $455 billion in remaining performance obligations, up 359% from a year earlier. Oracle now sees $18 billion in cloud infrastructure revenue in fiscal 2026, with the company calling for the annual sum to reach $32 billion, $73 billion, $114 billion and $144 billion over the subsequent four years. Ok. Who is paying for these? I know OpenAI's revenue 3x'ed this year to $12b. Let's say they get to $15b by end of the year. Let's say they 3x next year to $45b/year. $114b? $144b for Oracle? per year? Who? Can someone make a serious attempt at speculating who and how revenue will get to 144b/year? I know Oracle as a Stargate partner. Maybe this is OpenAI being extremely bullish on its growth figures? Edit: Ok. I have a theory. Oracle is the only big cloud company NOT developing their own AI silicon chips. AWS, Google, Meta, Apple, Microsoft are all making internal AI chips that compete against Nvidia. Nvidia prioritizes Oracle as a partner so the first and the bulk of Nvidia's chips go to Oracle. Therefore, AI labs are going to Oracle for Nvidia access. Video on Ellison having dinner with Jensen Huang "begging" him for GPUs [0]. [0]https://www.youtube.com/watch?v=zPQnPciuxhU https://www.youtube.com/watch?v=zPQnPciuxhU

trenchpilgrim 1y ago
Years ago I worked at a $BIGCORP which already had a major presence in Azure, AWS and private datacenters, and there was chatter with the execs about putting a footprint in Oracle. Wouldn't be surprised if that's happening now. Partnering with the non-Amazon cloud providers meant spending several millions in surplus infrastructure costs to hire more engineers to un-fuck the alternate cloud shitshows, but unlocked billions in partner deals (think Microsoft promoting our products running on Azure to Azure customers). And then every 3-5 years when we negotiated new cloud resource SKU discount rates we had leverage on common resources like VMs, storage buckets and SQL databases. "If you can't beat this rate we'll move part of our capacity to the other clouds" kinda thing.
panarky 1y ago
How do promises of $300B in future revenue somehow result in a $100B increase in Ellison's net worth today? - The $300B from OpenAI doesn't even start until 2027 and runs through 2031 - We don't know anything about OpenAI's options to cancel, delay or modify the deal - There's huge execution risk for Oracle, they have to scale up their operation by more 20x or 30x, obtain gear and staff and gigawatts of power - Even if everything goes perfectly, and both Oracle and OpenAI perform, that $300B is revenue, not profit -- 70% or 80% of that goes suppliers for capex and operating costs - That's an uncertain promise of a future stream of profits, and deserves a sizable discount to get back to present value - Ellison owns about 40% of Oracle, so how does the share attributed to him personally get to $100B in today's dollars?
- aurareturn 1y ago
  I agree. I think Wall Street overreacted a little. $300b seems like absolutely best case scenario.
- wmf 1y ago
  It's a bubble.
  - slaw 1y ago
    The bubble can stay irrational longer than you can stay solvent.
    - Ianjit 1y ago
      You don't have to short the bubble to watch it pop.
kwanbix 1y ago
Yeah, I saw the news and I was, WTF? I don't think any serious IT person likes Oracle. So how is it possible that they make so much money? Who is hiring them?
brendoelfrendo 1y ago
Someone explain to me how Oracle reporting residual performance obligations as though they were fact is different from Enron's mark-to-market accounting, because I don't really see why investors would do anything but run screaming from this. Oracle has been promised money by customers who don't currently have that money to deliver compute resources that Oracle doesn't currently have, and that adds $244 billion to their market cap in one day? That's the nearly the entire market cap of Cisco appearing out of thin air.
tim333 1y ago
Sam Altman was saying they had a plan to get to AGI. I guess that then $114b? $144b goes from investors to OpenAI to Oracle as that kicks in. Not saying I expect that to happen but I wouldn't be surprised if the narrative moving the stock is something like that.

trenchpilgrim 1y ago

Years ago I worked at a $BIGCORP which already had a major presence in Azure, AWS and private datacenters, and there was chatter with the execs about putting a footprint in Oracle. Wouldn't be surprised if that's happening now. Partnering with the non-Amazon cloud providers meant spending several millions in surplus infrastructure costs to hire more engineers to un-fuck the alternate cloud shitshows, but unlocked billions in partner deals (think Microsoft promoting our products running on Azure to Azure customers). And then every 3-5 years when we negotiated new cloud resource SKU discount rates we had leverage on common resources like VMs, storage buckets and SQL databases. "If you can't beat this rate we'll move part of our capacity to the other clouds" kinda thing.

panarky 1y ago

How do promises of $300B in future revenue somehow result in a $100B increase in Ellison's net worth today? - The $300B from OpenAI doesn't even start until 2027 and runs through 2031 - We don't know anything about OpenAI's options to cancel, delay or modify the deal - There's huge execution risk for Oracle, they have to scale up their operation by more 20x or 30x, obtain gear and staff and gigawatts of power - Even if everything goes perfectly, and both Oracle and OpenAI perform, that $300B is revenue, not profit -- 70% or 80% of that goes suppliers for capex and operating costs - That's an uncertain promise of a future stream of profits, and deserves a sizable discount to get back to present value - Ellison owns about 40% of Oracle, so how does the share attributed to him personally get to $100B in today's dollars?

aurareturn 1y ago
I agree. I think Wall Street overreacted a little. $300b seems like absolutely best case scenario.
wmf 1y ago
It's a bubble.
- slaw 1y ago
  The bubble can stay irrational longer than you can stay solvent.
  - Ianjit 1y ago
    You don't have to short the bubble to watch it pop.

kwanbix 1y ago

Yeah, I saw the news and I was, WTF? I don't think any serious IT person likes Oracle. So how is it possible that they make so much money? Who is hiring them?

brendoelfrendo 1y ago

Someone explain to me how Oracle reporting residual performance obligations as though they were fact is different from Enron's mark-to-market accounting, because I don't really see why investors would do anything but run screaming from this. Oracle has been promised money by customers who don't currently have that money to deliver compute resources that Oracle doesn't currently have, and that adds $244 billion to their market cap in one day? That's the nearly the entire market cap of Cisco appearing out of thin air.

tim333 1y ago

Sam Altman was saying they had a plan to get to AGI. I guess that then $114b? $144b goes from investors to OpenAI to Oracle as that kicks in. Not saying I expect that to happen but I wouldn't be surprised if the narrative moving the stock is something like that.