AgenticFinanceChileORCL Oracle Corporation
3-Statement Model
Integrated income statement, balance sheet, and cash flow projections with 3Y historical + 5Y forecast.
FY2025 Revenue
64,076
FY2025 Net Income
16,188
Revenue CAGR
13.3%
Projection Years
8
ORCL — Model Update | Pre Q4 FY2026
Oracle Corporation (NYSE: ORCL) | 2026-05-26
Rating: MAINTAIN BUY | Target: $190.00 | Prior: $168.50 (+12.8%) | Upside: +9.6% ($173.40) |
Update Trigger & Summary
Pre-Q4 FY2026 refresh (Q4 reports 2026-06-12, 17 days out). Eight weeks after initiation, the OCI/AI thesis has been independently validated on multiple legs: (1) Peer hyperscaler prints between 4/22-5/1 confirmed demand environment — MSFT Azure +33% (vs +31% prior), Google Cloud +35%, AWS +20% with rising operating margin, SAP cloud +27% YoY. (2) Management raised FY27 revenue guide to $90B (prior implicit ~$80-82B Street midpoint) — validates Pillar 1 trajectory. (3) 30K headcount reduction executed 3/31 (~18% of workforce) — TD Cowen models $8-10B annual cash flow uplift; structurally improves Pillar 4 margin trajectory. (4) $14-16B Pimco/BoA financing closed for Michigan AI data center — de-risks $156B multi-year capex plan from equity-dilution path. (5) New CFO Hilary Maxson (4/6) signals capital discipline shift. (6) Casablanca OCI region launched + Bloom Energy fuel cell partnership extend OCI footprint. We raise FY26E EBITDA +0.8% (Q4 layoff savings) and FY27E EBITDA +3.9% on full-year cost base + revenue revision. EPS lifts FY26E +1.4% to $7.30; FY27E +6.2% to $9.40. TP $168.50 → $190.00 (+12.8%) driven by higher FY27 EBITDA (×18x exit) and modest WACC compression as financing uncertainty resolves. MAINTAIN BUY; conviction 8.75 → 9.00. Stock $155.62 (init) → $173.40 today (+11.4%); upside compresses to +9.6% but Q4 print is the binary catalyst that should validate or invalidate the entire setup.
Peer Hyperscaler Reads — Q1 CY2026 (April/May Prints)
Peer | Report Date | Cloud Revenue | YoY Growth | Read for ORCL |
MSFT (Azure) | 2026-04-24 | $28.2B/Q | +33% (vs +31% prior) | CONFIRMS — AI services +14pp; OCI demand validated |
GOOGL (GCP) | 2026-04-24 | $13.8B/Q | +35% (vs +30% prior) | CONFIRMS — multi-cloud sticky; supports OCI thesis |
AMZN (AWS) | 2026-05-01 | $30.5B/Q | +20% / 38% op margin | CONFIRMS — pricing discipline; positive for OCI margins |
SAP (cloud) | 2026-04-22 | €5.2B/Q | +27% YoY | CONFIRMS — ERP migration cycle = Fusion ERP cross-sell |
CRM (Agentforce) | Awaited 5/21 | n/a | n/a | Pending — read for enterprise AI demand |
NOW (cRPO) | Awaited 5/22 | n/a | n/a | Pending — IT spend bellwether for OCI |
Post-Initiation Developments (2026-03-29 to 2026-05-26)
Date | Event | Magnitude | Thesis Impact |
2026-03-31 | 30K layoffs executed (~18% of workforce) | HIGH | Pillar 4 ↑ — $8-10B annual cash flow |
2026-04-06 | New CFO Hilary Maxson appointed | MED | Capital discipline signal — positive |
2026-04-13 | Stock +12.7% — largest 1-day move in 7 months | MED | Sentiment shift; product launches catalyze |
2026-04-13 | Oracle Utilities + Aconex AI product launches | MED | Pillar 2 ↑ — DB stickiness across verticals |
2026-04-15 | Casablanca OCI region opened | LOW-MED | Pillar 1 → — sovereign cloud expansion |
2026-04-22→05-01 | Hyperscaler peers reported (MSFT/GOOGL/AMZN/SAP) | HIGH | Pillar 1 ↑ — AI demand validated |
2026-05-05 | $14-16B Pimco/BoA Michigan AI DC financing | HIGH | Pillar 4 ↑ — capex de-risked, no equity dilution |
2026-05-10 | Bloom Energy fuel cell partnership | MED | Pillar 1 ↑ — power constraint mitigated |
2026-05-15 | Mgmt raised FY27 revenue guide to $90B | HIGH | Pillar 1 + 3 ↑ — confirms our $91.5B est. |
2026-06-12 | Q4 FY2026 Earnings — UPCOMING (17 days) | HIGH | BINARY — validates or refutes full setup |
Forward Estimate Revisions ($ Millions unless noted; ORCL FYE May)
Metric | Old FY26E | New FY26E | Δ FY26E | Old FY27E | New FY27E | Δ FY27E |
Revenue ($M) | 77,532 | 77,800 | +0.3% | 91,488 | 92,000 | +0.6% |
Revenue growth YoY | +21.0% | +21.4% | +40 bp | +18.0% | +18.3% | +30 bp |
Cloud revenue ($M) | 30,200 | 30,500 | +1.0% | 44,300 | 45,000 | +1.6% |
Cloud growth YoY | +27% | +28% | +100 bp | +47% | +48% | +100 bp |
OCI revenue ($M) | 13,400 | 13,800 | +3.0% | 23,500 | 24,500 | +4.3% |
OCI growth YoY | +55% | +58% | +300 bp | +75% | +78% | +300 bp |
Gross margin | 73.0% | 73.0% | — | 73.5% | 73.5% | — |
EBITDA ($M) | 33,180 | 33,455 | +0.8% | 40,712 | 41,860 | +2.8% |
EBITDA margin | 42.8% | 43.0% | +20 bp | 44.5% | 45.5% | +100 bp |
Operating Income ($M) | 26,510 | 26,855 | +1.3% | 33,400 | 34,500 | +3.3% |
Op margin | 34.2% | 34.5% | +30 bp | 36.5% | 37.5% | +100 bp |
Net Income ($M) | 20,500 | 20,800 | +1.5% | 25,200 | 26,400 | +4.8% |
EPS | $7.20 | $7.30 | +1.4% | $8.85 | $9.40 | +6.2% |
Avg Diluted Shares (M) | 2,847 | 2,850 | +0.1% | 2,819 | 2,810 | -0.3% |
Capex ($M) | (19,400) | (19,400) | — | (13,700) | (13,200) | -3.6% |
FCF ($M) | (6,800) | (6,500) | +4.4% | 8,200 | 10,100 | +23.2% |
RPO (year-end, $B) | 590 | 615 | +4.2% | 780 | 820 | +5.1% |
Restructuring Math — 30K Layoff Cash Impact
Item | Value | Source / Logic |
Headcount reduction | ~30,000 employees | Reuters/Bloomberg confirmed 3/31 |
% of pre-cut workforce | ~18% | ~167K → ~137K total |
Avg fully-loaded cost/employee | $280K-330K | Mix of US/EMEA/APAC eng + S&M |
Annualized payroll savings | $8.4B-$9.9B | 30K × $280-330K |
AFC base case savings (FY27) | $8.5B | Mid-point + 50% retention assumption |
FY26E impact (partial year — Q4 only) | ~$1.0B | Severance offsets, Q4 layoff savings ~75 days |
FY27E impact (full year) | $8.5B | Full annual run-rate; reinvested 30% in OCI capex |
Severance / restructuring charge | ~$1.5B | Q4 FY26 one-time; excluded from adj EBITDA |
EBITDA margin impact FY27E | +100 bp | $8.5B net / $92B revenue = +92 bp; rounded to +100 |
Net cash flow uplift FY27E | +$7.0B | $8.5B savings less ~$1.5B reinvestment |
Key Assumption Changes
- Revenue growth FY26E: 21.0% → 21.4% — Modest lift on OCI momentum (+58% vs +55%) per peer hyperscaler reads; cloud mix 39% → 39.2%.
- Revenue growth FY27E: 18.0% → 18.3% — Mgmt $90B guide vs our $91.5B underlying; we hold above guide on OCI capacity ramp from Michigan + Casablanca additions.
- OCI growth FY27E: +75% → +78% — Hyperscaler peers (MSFT Azure +33%, GCP +35%, AWS +20%) confirm cloud demand; OCI relative outperformance widens (ORCL gaining share from $25B base).
- EBITDA margin FY26E: 42.8% → 43.0% (+20 bp) — Q4 layoff savings (~$1.0B partial year) net of severance charges.
- EBITDA margin FY27E: 44.5% → 45.5% (+100 bp) — Full year of 30K layoff savings ($8.5B base case); offset by 30% reinvestment into OCI capex/R&D.
- Capex FY27E: $13,700M → $13,200M (-3.6%) — Pimco/BoA $14-16B Michigan financing structured off-balance-sheet; reduces capex line via operating lease treatment.
- FCF FY27E: $8,200M → $10,100M (+23.2%) — Compounding effect of layoff savings + capex restructuring; FCF inflection on track.
- RPO FY26E year-end: $590B → $615B — Q3 already at $553B (+63% YoY); Q4 sovereign cloud + Michigan AI DC pre-bookings drive +$60B sequential.
- Share count FY27E: 2,819M → 2,810M — Lower share count on $5B incremental buyback funded by layoff cash savings.
- WACC: 11.1% → 10.85% (-25 bp) — Pimco financing removes equity dilution overhang; debt cost stable but equity risk premium compresses on de-leveraging visibility.
- Exit EV/EBITDA: 18x → 18x — Unchanged; ORCL still discount to MSFT (24.5x) and CRM (22.1x).
- Terminal growth: 3.0% → 3.0% — Unchanged; OCI durable but mature in 5-7 years.
- Conviction 8.75 → 9.00 (+0.25) — Peer reads + layoff execution + Pimco financing remove 3 of 5 key risks identified at initiation; only Q4 print + competitive dynamics remain binary.
Valuation Impact
Method | Weight | Prior FV | Updated FV | Change | Notes |
DCF — Bear (11% CAGR, 15x exit) | 25% | $78.00 | $92.00 | +17.9% | Layoff savings offset slower OCI; FCF inflection FY28 |
DCF — Base (14.5% CAGR, 18x exit) | 50% | $168.50 | $190.00 | +12.8% | WACC 10.85%; EBITDA $41.9B FY27 × 18x |
DCF — Bull (18% CAGR, 21x exit) | 25% | $257.00 | $285.00 | +10.9% | OCI sustained 50%+; FY27 EBITDA $44B+ × 21x |
Probability-weighted DCF | 100% | $167.75 | $189.25 | +12.8% | Bear 25 / Base 50 / Bull 25 (unchanged) |
Comps cross-check (22x FY27E P/E) | — | $195.00 | $207.00 | +6.2% | Premium to ORCL avg historical 18-20x; in line MSFT 22x fwd |
EV/EBITDA cross-check (18x FY27) | — | $211.00 | $224.00 | +6.2% | Hyperscaler avg 20-22x; ORCL discount narrows |
Blended TP (rounded) | 100% | $168.50 | $190.00 | +12.8% | DCF base anchored; comps supportive |
Target Price Bridge: $168.50 → $190.00
Driver | Δ USD | Direction | Rationale |
Starting TP (initiation 2026-03-29) | $168.50 | — | DCF base, BUY conv 8.75 |
Higher FY27E EBITDA (+2.8% to $41.9B) | +$10.00 | Positive | +$1.15B × 18x exit / 2,810M sh |
Layoff structural margin uplift FY28+ | +$6.00 | Positive | $8.5B/yr × 5-yr DCF horizon NPV |
Pimco financing removes equity overhang | +$3.00 | Positive | WACC -25bp; equity risk premium compresses |
Higher OCI growth FY27 (+78% vs +75%) | +$2.50 | Positive | Hyperscaler reads validate demand |
Time value (DCF rolls forward 8 wks) | +$1.00 | Positive | De-discounting on intermediate cash flows |
Risk discount — Q4 binary print | -$1.00 | Negative | 17 days to Q4; modest haircut |
Net change | +$21.50 | Positive | Multi-leg validation of cloud thesis |
Ending TP | $190.00 | — | BUY maintained; conviction 9.00 |
Thesis Pillar Status — Pre Q4 FY2026
# | Pillar | KPI Read (Latest) | Status | Conviction |
1 | Cloud Revenue Acceleration & OCI Momentum | OCI +52% Q3 FY26; cloud mix 45%; RPO $553B (+63%); peer hyperscalers all accelerating in Q1 CY26 | BEATING (was On Track) | 10 (was 9) |
2 | Database Lock-in — Durable Moat | RDBMS share stable ~40%; Autonomous DB +35%; Oracle Utilities/Aconex AI launches extend stickiness | ON TRACK | 10 (was 10) |
3 | RPO Backlog — Revenue Visibility | RPO $553B (+63%); mgmt FY27 guide $90B confirms our $91.5B est.; Michigan AI DC adds $15-20B RPO | BEATING (was On Track) | 10 (was 9) |
4 | Margin Expansion as Capex Normalizes | 30K layoff = $8-10B annual savings; CapEx normalizing FY28; Pimco financing removes dilution overhang | STRENGTHENING (was On Track) | 9 (was 7) |
— | NEW: Capital Structure De-Risking | $14-16B Pimco/BoA off-balance-sheet financing; new CFO signals discipline; net debt/EBITDA 4.5x → 4.0x by FY27 | STRENGTHENING (new) | 8 (new) |
— | MONITOR: Q4 Print Binary Risk | 17 days to Q4; FY27 guide refresh + capex trajectory key; OCI growth must hold >50% to validate | BINARY EVENT | Watch |
Q4 FY2026 Watch Items — 2026-06-12
Metric | AFC FY26 Est. | Q4 Implied | Bull / Bear Threshold | Read-Through |
Total Revenue ($B) | 77.8 | 21.0 | >21.5 bull / <20.0 bear | OCI capacity ramping into Q4 |
OCI Growth YoY (%) | +58% | >55% | >60% bull / <50% bear | Key Pillar 1 read |
Cloud Revenue ($B) | 30.5 | 8.5 | >9B bull / <8B bear | Mix shift accelerator |
RPO ($B) | 615 | — | >630 bull / <590 bear | Forward visibility — Pillar 3 |
EBITDA Margin (%) | 43.0% | ~44% | >44.5% bull / <42% bear | Layoff impact first read |
EPS ($) | $7.30 | $1.92 | >$2.00 bull / <$1.80 bear | Validates FY27 $9.40 est. |
Capex ($B) | (19.4) | (5.0) | <$4.5B bull / >$5.5B bear | Pimco financing absorbs new commit |
FCF ($M) | (6,500) | (500) | >$0 bull / <($1B) bear | FCF inflection signal |
FY27 Revenue Guide ($B) | — | — | >$92B bull / <$88B bear | vs mgmt $90B prior guide |
FY27 Capex Guide | — | — | <$14B bull / >$16B bear | Capex peak confirmation |
Bottom Line — What Changes & What Doesn't
WHAT CHANGES: (1) TP raised $168.50 → $190.00 (+12.8%) — primarily on FY27E EBITDA +2.8% to $41.9B (peer hyperscaler validation + 100bp margin uplift from 30K layoff) and modest WACC compression as Pimco financing removes equity dilution overhang. (2) FY26E EPS $7.20 → $7.30 (+1.4%); FY27E $8.85 → $9.40 (+6.2%). (3) Conviction 8.75 → 9.00 — three of five initiation risks removed (peer reads, layoff execution, financing structure); only Q4 print and competitive dynamics remain binary. (4) Pillars 1, 3 upgraded to BEATING; Pillar 4 STRENGTHENING. NEW Pillar 5: Capital Structure De-Risking (Pimco off-balance-sheet, new CFO discipline). WHAT DOESN'T: (1) Rating stays BUY. (2) Pillar 2 (Database Moat) status unchanged. (3) DCF structure unchanged — Bear 25 / Base 50 / Bull 25 weights, 3.0% TG, 18x exit. (4) Net debt still $123B (4.5x EBITDA) — only modest deleveraging by FY27 (to 4.0x). (5) Q4 print on 6/12 is binary catalyst — entire setup re-tests against fresh OCI growth + RPO + FY27 guide. UPGRADE TRIGGER: TP to $215+ if Q4 OCI >60% AND FY27 guide >$92B AND mgmt commits to capex peak FY27. DOWNGRADE TRIGGER: HOLD if OCI decelerates to <50% (decay vs peers) OR FY27 guide cut to <$87B; SELL if capex extends through FY29 with no FCF visibility.
Change Log
Date | Action | Previous | New | Notes |
2026-03-29 | Initiate coverage | N/A | BUY, TP $168.50, Conv 8.75 | DCF base + comps; 4-pillar thesis |
2026-04-13 | Morning note (no rating change) | BUY, TP $168.50 | BUY, TP $168.50, Conv 8.75 unchanged | Stock +12.7%; layoff catalyst noted |
2026-05-26 | Model update pre Q4 FY26 | BUY, TP $168.50, Conv 8.75 | BUY, TP $190.00 (+12.8%), Conv 9.00 | Multi-leg validation: hyperscaler reads + layoffs + Pimco + FY27 guide |
Disclaimer: Esta no es una recomendacion de inversion. El analisis tiene fines educativos e ilustrativos. El desempeno pasado no garantiza resultados futuros. Siempre realice su propia investigacion antes de invertir.
Datos Estructurados
Fuente: Yahoo Finance, SEC EDGAR, Damodaran, Company Filings