00:00Anything here that you equip, Rishi, with regards to some of these headline numbers?
00:05Yeah, look, and thanks so much for having me. Always a pleasure to be here.
00:08Look, I think the numbers across the board were definitely better than feared.
00:11There were concerns around financing, concerns around the timeline of being able to turn the backlog that's sitting in RPO
00:19into revenue.
00:20Clearly, with the overachievement on OCI in the quarter and the raised guide, I think that some of those worries
00:27might be temporarily put to rest.
00:29You know, if I were to say, what am I poking at here? Probably it's the app's revenue.
00:34There's already been weakness in their application software and some of their traditional software.
00:38And, you know, now you have maybe potentially the impact of RIFs layering on that.
00:43So we might see further deceleration in that line.
00:46But I think very clear right now the stock trades almost entirely on OCI and RPO at these levels.
00:51Well, I am curious. I mean, you've had a sector perform on the stock for at least a couple of
00:56years or maybe even more than that.
00:58Give me a sense here as to sort of what any potential upside is.
01:02I mean, this stock hit a record high, believe it or not, on this day one year ago and, of
01:06course, hasn't been anywhere near that record high since.
01:10Yeah, look, I think part of my skepticism and why I've been on the sidelines, even at the peak of
01:14the large Stargate deal, was really around kind of the durability of growth.
01:19We definitely expected that just by having excess capacity on Oracle Cloud Infrastructure, that there would be some tailwinds.
01:26Obviously, those have been larger than expected, but questioning the durability and margins here.
01:31And, you know, I think these are unanswered questions that we just won't know for a while.
01:35But that's where we've kind of been on the sidelines and see the stock kind of roundtrip up, roundtrip back
01:40down.
01:41Look, as I think about right now, there's still going to be questions around the margins on OCI.
01:46There's going to be questions around the funding, around the timeline.
01:50You know, I think from what it looks like, they delivered 850 megawatts in the quarter versus one gigawatt of
01:56capacity that was expected.
01:58So even with the high OCI number, there are concerns about how quickly some of that capacity can come online
02:04and their ability to raise funds for it,
02:06especially as we see component price inflation, be it memory, be it power or whatever other input have you.
02:12Yeah, and they do talk a little bit about some of the capital issues.
02:15It's saying right now there's no incremental impact on its plans to raise capital,
02:19which I guess is its sort of fancy way of saying that all that money we already said we were
02:23going to borrow,
02:23well, that's already in the can.
02:25Who knows whether that changes or not?
02:27Where do you think, though, that Oracle will fit in long term in this story?
02:32And I'm not necessarily betting on whether it's a winner or a loser, but it's clearly sort of, you know,
02:36trying to use its sort of legacy bona fides as a database software company and apply that to what is
02:43still effectively,
02:44with the AI era, a database era to one extent or another.
02:49Yeah, absolutely.
02:50Look, I think the ambitions of the company are obviously not, you know, leverage this infrastructure,
02:55but have those workloads move up the stack, have AI database and analytics and coding.
03:00In my opinion, just given where they've underinvested in a lot of these areas otherwise,
03:04it really feels like, you know, this is more going to be a temporary benefit,
03:08that they'll see this massive scaling up of OCI revenue,
03:12but it may not be durable and it may not come at real margins that contribute to the bottom line
03:17and the profitability, which is ultimately what matters, you know, I think in the long term.
03:20So we might see these kind of fits and starts like we're seeing today of upside on OCI and whatever
03:26have you.
03:27But the long term durability is where I still have questions.
03:29And ultimately, that's where I see how it plays out is this feels more like a, you know,
03:34one to two year story on some of the OCI ramp.
03:37But longer term, I think we're going to see it in other more innovative companies.
03:41I just want to kind of wrap a bow on the earnings season because, I mean, this is basically it
03:46for the most part of,
03:47at least with regards to the AI and big tech trade story.
03:50We got NVIDIA, now we got Oracle, and I guess the earnings season basically starts right back up
03:56in about three or four weeks' time.
03:58But, I mean, just kind of grade it overall in terms of did it meet your expectations?
04:02And more importantly, with the forecasts and the long term outlooks that you heard from some of these companies,
04:08does it give you confidence overall in the durability of the AI trade?
04:13Yeah, absolutely.
04:14Look, if I were to say, and you're exactly right, it feels like software and AI earnings are just never
04:18ending.
04:19So good to just put a wrap on it now temporarily.
04:21But I think you're exactly right.
04:23Like, look, my perspective is the earnings season came in better than feared.
04:26We're seeing real enterprise AI demand.
04:28We're seeing no slowdown in CapEx, which is obviously fueling the entire AI trade.
04:33And we're starting to see green shoots of AI outside of just hardware and semis and infrastructure,
04:39into infrastructure, into cybersecurity, into database, and even into applications.
04:44And that tells me that, you know, the overall AI trade, you know, regardless of where it falls,
04:49is probably more durable than the market is giving credit for right now.
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