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ELD Asset Management positions Oracle Corporation’s latest numbers as a defining moment in the AI infrastructure cycle, with the enterprise group’s cloud engines gathering force while capital requirements climb. For Q1 FY2026, the quarter ended August 2025, total cloud revenue advances 27% year on year to $8.11 billion and cloud infrastructure revenue rises 54% to $3.72 billion, presenting momentum that institutional allocators can calibrate against near‑term cost pressures.
Oracle’s multi‑cloud database services tied to Amazon, Google and Microsoft expand 1,529% in Q1 FY2026, reinforcing the strategy of placing workloads alongside customers’ preferred platforms. Group revenue increases 12% in USD terms to $16.78 billion for the quarter, although non‑GAAP earnings per share register $1.65, a shortfall of $0.01 relative to consensus. GAAP earnings per share stand at $1.13, with net income of $3.30 billion as operating expenses reach $7.03 billion.
The forward book intensifies. Remaining performance obligations are now disclosed at approximately $455 billion for Q1 FY2026, signalling contracted revenue to be recognised across coming periods. Capital expenditure accelerates to $9.57 billion in the quarter, nearly four times the $2.58 billion invested in the comparable quarter a year earlier, underlining the build‑out required to meet AI workloads. Jason Harrison, Senior Vice President at ELD Asset Management, notes that “the substantial contract backlog provides revenue visibility, though execution capabilities will determine long‑term returns on these significant investments.”
Contract concentration is central to the investment debate. Market intelligence highlights a multi‑year agreement with OpenAI estimated at about $300 billion across five years commencing in 2027, anchoring demand for compute capacity. The scale enhances strategic clarity while introducing dependency on a single counterparty’s technology roadmap and funding cadence. Harrison comments that “fulfilling large, dated commitments requires disciplined cash allocation before revenue recognition, so portfolio sizing should reflect both the growth optionality and the liquidity profile.”
Valuation signals reflect the AI trade’s breadth. In September 2025, a single‑day share price rise of 36% lifts Oracle’s market capitalisation intraday to roughly $1.25 trillion, later settling near $1.01 trillion as trading consolidates. The forward price‑to‑earnings multiple of about 45.3 sits well above peers such as Amazon near 31.3 and Microsoft near 31 for 2025 year‑to‑date. Across the index, AI‑centric leaders account for close to 30% of S&P 500 weight in 2025 year‑to‑date, with research houses attributing roughly half of the index’s 11% gain this year to the theme and identifying an “AI premium” of about 14.2% on valuations. The broader narrative includes the transformation of champions such as Nvidia, whose capitalisation has approached roughly $4.51 trillion in 2025, underscoring the market’s willingness to capitalise infrastructure winners.
For institutional portfolios, the question is positioning rather than headline excitement. The data points from Q1 FY2026 suggest a hybrid profile that couples established software cash flows with an expanding AI infrastructure franchise. Allocation frameworks will weigh the growth runway against client concentration, delivery risk, supply constraints and power availability. Comparative assessments against Amazon, Microsoft and Google on price, performance, ecosystem fit and sovereignty controls remain decisive for share‑of‑wallet outcomes over the next several quarters.
ELD Asset Management concludes that outlook now turns on execution. If the backlog converts on schedule and the capacity build remains on budget, the earnings bridge looks achievable even with elevated capital intensity. Should customer requirements or the cost of power and equipment evolve materially before 2027, investors will test whether today’s valuation implies sufficient risk compensation. The next few reporting periods will therefore matter as much for operational cadence as for headline growth.
About ELD Asset Management
Established in 2017, ELD Asset Management Pte. Ltd. (UEN: 201725839Z) provides strategic investment counsel grounded in rigorous market research and global macro analysis. The firm tracks changes in international markets so that clients can anticipate opportunities and align portfolios with clarity and discipline. Further commentary and updates are available at https://www.eldglobal.com/news/
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