Technology Oracle

09/11/25 Prospero.ai Investing (252nd) Edition (Midweek)

Sep 11, 2025

∙ Paid

You might have woken up this morning, turned on the finance news and the first thing you heard was that Oracle was EXPLODING. And it did. ORCL ended the day +35.95% up, which is an insane move for a company its size. To give you an idea of how big a jump it experienced, The Wall Street Journal projects that ORCL grew a staggering $247 Billion in additional market cap today, propelling the company past J.P. Morgan Chase to become the 10th largest U.S. company by market cap! Why did ORCL experience this unbelievable jump? Did it crush earnings? Nope. It actually missed on its top and bottom line, coming in below estimates on both revenue and Non-GAAP EPS. The answer lies in a metric called RPO or "Remaining Performance Obligations", a forward looking measure of contracted future revenue, which surged an astounding 359% to $455 Billion.This surge in RPO is a result of demand from ORCL's A.I. cloud services.

But this massive surge in the old school name of ORCL brings up a fascinating question. Are we entering into a new phase A.I.? In other words, in 2024, when you thought of A.I. you thought of early movers like NVDA and PLTR – companies on the cutting edge of this new and largely unknown technological frontier. When you thought of Cloud Based A.I. you thought of Amazon and Google. But now we're seeing some of the "Old Guard" companies getting dragged into the 4th industrial revolution. Companies like Oracle. The market read this move today as immensely positive. The bottom line is that if an old school company like ORCL can have an RPO of $455 Billion, then for crying out loud there must be something to this A.I. thing.

But all this brings us to an interesting question. Who are these customers actually raising ORCL's future revenue to such a level and how are their customers different from AWS or Google Cloud? Well, our crack team here at Prospero did some research and here's what we found. ORCL's dramatic revenue growth stems from 4-multibillion dollar contracts signed from different customers. While ORCL maintains strict confidentiality regarding their client lists, their customer profile stems from several sectors like Financial Services, Banking, Healthcare, Manufacturing and the Government. And it's THERE that lies the secret to their explosive growth. You see, traditional cloud providers (Amazon/Google, etc) first grew their businesses by serving tech start-ups and web apps (think Netflix and Airbnb). But ORCL is providing services to existing, big, traditional, established companies in the more old school sectors. What does this tell us? It tells us that A.I is likely not a passing fad, but it's here to stay and ORCL is on the cutting edge of making sure that old school companies get their piece of the pie.

But let’s talk about the idea of an “AI bubble.” We believe it’s important to distinguish between two different ideas.

Yes, there is overspending in AI, and much of it may not generate a real return on investment.

However, that concern doesn’t apply—at least not anytime soon—to chipmakers like NVDA or cloud providers such as ORCL. Sellers of chips and compute are earning very real ROI on their sales today. Those remaining performance obligations are very real. While many smaller to mid-sized companies offering chatbots or AI services may struggle—or even fail—most agree that we are still in the early stages of a gold rush. And right now, it’s a very good time to be selling pickaxes.

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