Oracle is mentioned in the context of rising capital expenditure expectations among major cloud hyperscalers. The expected FY26 capex by Oracle, along with other companies, has risen significantly, indicating a shift in the capital intensity of the sector. However, there are concerns regarding the ability of these investments to generate sufficient long-term returns, as free cash flow expectations have fallen dramatically for most hyperscalers, including Oracle.

Oracle has emerged as a significant player in the AI market, supported by its close relationships with leading AI and hyperscaler partners. This has resulted in strong earnings performance and a growing contracted orders backlog that now exceeds $550 billion. Despite concerns over its capital spending plans, we believe Oracle's execution on growth projects may give investors greater confidence in the potential returns on investment. The recent share price decline is viewed as an overreaction, and we remain optimistic about the company's ability to capitalize on the transformative period in AI infrastructure.

Oracle is strategically positioned in the current AI arms race, having raised $5 billion in equity with an additional $20 billion planned to fund its AI infrastructure. This significant investment reflects the urgency for survival in a rapidly evolving technological landscape. The hyperscalers, including Oracle, are committing substantial resources to build the necessary infrastructure for the next phase of the economy, which is expected to create value not only for themselves but also for the broader corporate economy as they leverage AI to improve efficiency and margins.

Oracle is positioned strongly within the ongoing AI infrastructure build-out, as evidenced by its significant capital commitments. The company has been a key player in the hyperscaler capex cycle, which has seen expected FY26 spending rise dramatically. Oracle's aggressive borrowing of $43 billion over the past year to fund AI capital expenditure underscores its commitment to this growth area. This strategic positioning not only highlights Oracle's role in the AI ecosystem but also suggests a robust future as demand for AI compute capacity continues to expand.

Oracle is mentioned in the context of its competitive position alongside SAP in the enterprise resource planning (ERP) software market. The letter discusses the embedded nature of ERP systems in customer workflows and the high costs associated with switching suppliers, highlighting the operational risks involved. While the focus is on SAP's transition to cloud-based solutions and the implications of generative AI, Oracle is noted as a key competitor in this duopoly, indicating its relevance in the ongoing technological shifts within enterprise software.

We believe Oracle (ORCL) is well-positioned within the AI capital spending boom, with a significant revenue backlog contributing to its growth. The hyperscalers, including Oracle, have a combined revenue backlog of $2 trillion, which has increased from $550 billion in just two years. This growth reflects the strong demand for AI infrastructure and the company's ability to capitalize on this trend. As the market for AI continues to expand, Oracle's role in this sector is expected to enhance its long-term value and growth potential.

Oracle sits underneath a stunning amount of the world’s data and has become one of the more important landlords of AI computing infrastructure. The demand for its cloud has been remarkable. That strength is also why we trimmed the position modestly, harvesting some of a strong run to fund ideas where we saw more room ahead.

Oracle Corp is mentioned as part of a group of hyperscalers that lagged amid concerns about returns on their enormous investments. The letter discusses the broader market dynamics and valuation trends but does not provide a specific investment thesis or directional argument regarding Oracle Corp itself.

Oracle is mentioned in the context of capital expenditure forecasts for hyperscalers, which are expected to exceed US$1 trillion. However, there is no explicit directional argument made about Oracle's future performance or valuation.

Oracle Corporation is mentioned as a single technology name in the portfolio, but there is no explicit argument made about its future performance or valuation.