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What has to happen in Hardware

Model as of

This page changes Hardware inside the complete ORCL model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

ORCL forward model
Horizon
Consolidated fair value $122.53 all other verticals held in this portfolio case
Final-quarter revenue $719M 2% of company revenue
Explicit segment contribution $8.39B EBITDA less segment capex, before corporate items

Oracle will not publish RPO by customer, and what it does publish points at concentration: four customers each signed for more than $8B in a single quarter, and in the GPU renewal cohort fewer than half the customers came back. Management's answer is that the non-renewed capacity was resold inside the quarter at 97.5% global utilisation — true, and also exactly what you would expect while demand exceeds supply. This case asks what the book is worth if that stops being true.

Hardware

Basis quarter$774M
Final quarter$719M
Implied CAGR−1%
Final revenue mix2%

Engineered systems, servers and storage — Exadata and its relatives, $3.1B in FY2026 and up 5%, the first growth in years as Exadata rides the database business into cloud. Small, seasonal, and profitable at a 65% segment margin, but structurally a supporting act.

Last four quarters
2026 Q2 $776M Reported
2026 Q3 $714M Reported
2026 Q4 $924M Reported
2027 Q1 $774M Reported
Engineered systems (Exadata)Servers and storageHardware support
Sequential growth +1.2%/qtr decaying toward +0.5% About 5% annually, matching FY2026; seasonality handles the recurring Q4-to-Q1 reset.
Hardware

Latest: $719M (2032Q1E)

Period Value
2025Q1 $655M
2025Q2 $728M
2025Q3 $703M
2025Q4 $850M
2026Q1 $670M
2026Q2 $776M
2026Q3 $714M
2026Q4 $924M
2027Q1 $774M
2027Q2E $879M
2027Q3E $828M
2027Q4E $1.03B
2028Q1E $773M
2028Q2E $874M
2028Q3E $820M
2028Q4E $1.02B
2029Q1E $762M
2029Q2E $860M
2029Q3E $807M
2029Q4E $1.00B
2030Q1E $748M
2030Q2E $844M
2030Q3E $791M
2030Q4E $984M
2031Q1E $734M
2031Q2E $828M
2031Q3E $776M
2031Q4E $965M
2032Q1E $719M

Assumptions & reasoning

  • This is one of only two verticals whose margin is disclosed rather than assumed: the 10-K reports hardware segment operating income of $2,017M on $3,084M of revenue, a 65.4% margin that has held within a point for three fiscal years.
  • The line turned positive in FY2026 after years of decline, growing 5%. Oracle attributes that to Exadata demand pulled along by the database business, which makes it a lagging read on the same thing the infrastructure line measures. Two years of trend-adjusted quarterly factors now carry the recurring Q4 peak without forcing a Q1 contraction into the growth rate.
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