October 16th "Analyst Day," this time Oracle attracts the attention of the entire market.

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Oracle’s upcoming Financial Analyst Day on October 16 is receiving unprecedented attention, with its record-breaking $317 billion in remaining performance obligations (RPO) growth in the first fiscal quarter and the subsequent 36% stock price surge setting exceptionally high expectations.

According to Chase Wind Trading Desk, Barclays analysts noted in a report on the 13th that although the company has raised its mid-term growth outlook in its financial reports, management still has the opportunity to strengthen investors’ confidence in the complex factors underpinning its AI-driven success, which may attract greater investor interest.

Oracle’s quarterly increase in RPO soared to an unprecedented $317 billion, a figure that has completely reshaped Wall Street’s expectations about its future growth. This never-before-seen performance drove a one-day stock price increase of 36%, the largest single-day gain since 1992. The company expects RPO to exceed $500 billion by the end of the year, a twelvefold increase over five years ago.

However, enormous opportunities come with equally immense challenges. The market is generally uneasy about the massive computing power required to support these AI-related RPOs and recent supply chain constraints, raising concerns over whether Oracle can deliver on its contracts as scheduled. These execution risks, combined with recent giant AI computing agreements with companies like OpenAI, Nvidia, and AMD, have made investors eager for clearer information at the Analyst Day.

The market's focus has shifted from the surprise of revenue growth to a deeper investigation into practical execution and financial impacts. Barclays analysts believe management has the chance at this event to help investors build confidence by detailing the 'moving parts' behind these massive orders, potentially attracting more incremental investor interest. Thus, this Analyst Day is not just a showcase of Oracle’s achievements, but a key test in addressing market doubts and consolidating confidence.

Historic RPO Growth Sets Positive Tone; Capital Expenditure and Profit Margins Under Scrutiny

After achieving a record $317 billion incremental RPO in the first fiscal quarter (more than double its previous RPO stock), Oracle has successfully placed a grand narrative of long-term growth before investors. This astonishing growth has prompted market analysts to sharply raise their expectations, with Oracle’s fiscal 2029 revenue forecast leaping from $99 billion to $167 billion.

According to Barclays’ analysis, most of the revenue growth potential from these large AI contracts has likely already been reflected in the updated consensus forecasts. Oracle gave mid-term revenue guidance for its cloud infrastructure (OCI) business in its Q1 earnings report, but did not update total company revenue targets. As a result, investors’ primary concerns have now shifted towards the capital expenditure (CapEx) and profit margin impacts behind these deals. Oracle has raised its FY2026 CapEx guidance from “over $25 billion” to $35 billion, but analysts widely expect spending to climb substantially in the future to meet the contracted computing power delivery needs.

The more critical issue is profit margin. Barclays estimates gross margin for AI training businesses is slightly above 25%. Therefore, the market generally expects increases in AI revenue to compress the company’s overall operating margin. Investors will closely watch management’s explanation of unit economics (like CapEx and revenue per gigawatt, investment payback period, etc.) to better assess Oracle’s profitability outlook. Additionally, according to recent media reports, Oracle’s GPU server business gross margin is about 14%, which Barclays expects Oracle to counter at Analyst Day to reassure investors about business profitability.

Huge Contracts Spark Feasibility and Customer Concentration Risk Doubts

Of all the new contracts, the deal with OpenAI draws the most attention and raises the most questions. Oracle has signed a $300 billion cloud computing agreement with OpenAI to develop up to 4.5 GW of “Stargate” AI data center capacity within five years. The scale of this massive contract has sparked two layers of concern about its feasibility among investors.

On one hand, the market worries about whether Oracle can cope with potential power and data center equipment supply chain constraints and deliver such vast computing power on time. On the other, given the contract's value far exceeds OpenAI’s current revenue level and its high cash burn, there are also concerns over OpenAI’s ability to pay.

These worries have intensified as OpenAI recently announced major computing power agreements with other suppliers. Nvidia announced it would provide OpenAI up to $100 billion to help build data centers scalable to 10 GW; at the same time, AMD also announced a strategic partnership with OpenAI to deploy 6 GW of AMD GPUs. Naturally, these developments have raised more questions among investors about Oracle’s relationship stability with OpenAI and the risks of relying on a single major customer. Barclays believes Oracle management has the opportunity to address these concerns at Analyst Day and ease market worries.

Management Changes and Major Deals as New Watchpoints

At a pivotal moment for a series of business transformations, Oracle also announced significant management changes. Following the long-successful leadership of Larry Ellison and Safra Catz, the company has promoted former OCI President Clay Magouyrk and former Industry President Mike Sicilia to Co-CEOs. Ellison and Catz will continue to be active within the company to ensure a smooth leadership transition.

This unexpected move initially caused some confusion in the market, but feedback was ultimately positive. Barclays analysts noted that Oracle’s long-standing highly centralized management structure had raised investor concerns about succession planning, and this adjustment helps form a more traditional corporate governance model, eliminating a long-standing risk. Investors are expected to seek more details at Analyst Day on how the new Co-CEO structure will operate collaboratively.

To support the large-scale AI data center construction plans, Oracle recently raised $18 billion in the bond market, with the offering receiving nearly $88 billion in excess subscriptions. This shows that the market understands the necessity for Oracle to finance its RPO obligations. The company’s financing needs, leverage levels, and impact on earnings per share are expected to be another core topic at Analyst Day.

In addition, it is reported that Oracle will, together with Silver Lake and MGX, become major investors in TikTok’s US operations. Oracle is expected to maintain its existing role as cloud service provider in this transaction and may play a broader role in company operations. The details and investment implications of this deal may also be among the Analyst Day discussion topics.

Barclays maintains its “Overweight” rating on Oracle and raises the price target from $347 to $367, based on a 33x P/E multiple of $14.82 EPS in 2029. As of press time, Oracle’s US shares are up 0.35% premarket to $308 per share, leaving about 12% upside to the target price.

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The above highlights are from Chase Wind Trading Desk.

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