ORACLE CORP

Capital Expenditures (CapEx)

• Fiscal Year 2025 CapEx Projection
  • Expectation: CapEx is expected to double compared to fiscal year 2024.
  • Rationale:
    • Aligning CapEx investments with booking trends.
    • Increased demand reflected in Remaining Performance Obligation (RPO) numbers and pipeline growth.

Investments in AI

• AI Infrastructure Enhancements

  • AI Supercomputer Deployment:
    • Scale: Largest and fastest AI supercomputer with 65,000 NVIDIA H200 GPUs.
    • Purpose: Supports the training of various generative AI models for major customers like OpenAI, xAI, Nvidia, Cohere, and Meta.

• AI Model Training and Development:

  • AI Agents:
    • Automating processes such as drug design, cancer diagnostics, patient care updates, agricultural output prediction, fraud detection, biometric log-ins, and video weapons detection.
  • Oracle 23ai Vector Database:
    • Enhances the ability to use existing data for training industry-standard generative AI models like ChatGPT, Grok, and Llama.

• Networking Investments:

  • Objective: Rapidly move large volumes of data into GPU clusters to avoid bottlenecks.
  • Approach:
    • Heavy investment in network software and hardware.
    • Enhancing data center networking capabilities to support faster AI training processes.

Investments in Infrastructure

• Oracle Cloud Infrastructure (OCI) Expansion
  • Modular Data Center Design:
    • Racks: Uniform racks ranging from 50 kilowatts to 1.6 gigawatts.
    • Scalability: Enables quick manufacturing and deployment, reducing costs and inventory needs.
  • Cloud Regions:
    • Current: 98 live cloud regions.
    • Planned: Many more regions to follow, leveraging modular racks for flexible scaling.
• Automation and Standardization:
  • Automation Tools: Single suite of automation tools operating across all regions.
  • Standard Services: All regions offer the same services, simplifying customer provisioning and enhancing scalability.
• Capacity Expansion:
  • Second Half of Fiscal Year 2025:
    • Significant capacity additions to meet growing demand.
    • Ability to deploy smaller footprints and expand as customer needs increase, aligning CapEx closely with revenue growth.

Summary

Oracle Corp is significantly increasing its capital expenditures in fiscal year 2025 to support its expanding AI and infrastructure initiatives. Investments in AI include deploying the world's largest AI supercomputer and developing advanced AI agents, supported by robust networking enhancements. In infrastructure, Oracle continues to scale its Cloud Infrastructure with a modular, automated approach, allowing for rapid deployment and flexibility in cloud region expansion. These strategic investments aim to maintain Oracle's competitive edge in AI and cloud services while ensuring CapEx aligns with revenue growth and market demand.