Strategic Review

From software to AI infrastructure: where it stands today

Group 4

Francesco Giuseppe Brogna · Simone Di Paolo · Eleonore Galli · Bela Ahrens · Zoé Dedieu

ESCP Business School

Oracle Strategic Review Contents

Where each of the professor's questions is answered

FIRST ASSIGNMENT

2

Q1.1

3

Q1.2

4

Q1.2

5

6

Q1.2 · Q1.3

7

Q1.4

8

Q1.4

9

Q1.3

10

Q1.4

SECOND ASSIGNMENT

11

Q2.1

2031

2036

2036

2036

2041

12

Q2.1 · Q2.2

13

Q2.2

Q2.3 · Q2.4

Questions of the first assignment. Q1.1 the company · Q1.2 performance of its industries and benchmark industries · Q1.3 competitive advantage and its drivers

Q1.4 positioning: matrix and archetypes · Q1.5 charts (on every page)

Questions of the second assignment. Q2.1 at least five foresights, opportunities or threats · Q2.2 vision and mission, internal and external, criticised in light of the foresights

Q2.3 revised vision and mission · Q2.4 Level of Ambition, From – To

Oracle Strategic Review 01 Oracle at a glance

2

What does Oracle sell, and where does it run?

Revenue by line, fiscal year to 31 May 2026, change on the year before: Oracle 10-K FY2026, notes on revenues and segments. Latest quarter: 10-Q to 31 Aug 2026.

Oracle Strategic Review 01 Oracle at a glance

2

What does Oracle sell, and where does it run?

Revenue by line, fiscal year to 31 May 2026, change on the year before: Oracle 10-K FY2026, notes on revenues and segments. Latest quarter: 10-Q to 31 Aug 2026.

Oracle Strategic Review 01 Oracle at a glance

2

What does Oracle sell, and where does it run?

Revenue by line, fiscal year to 31 May 2026, change on the year before: Oracle 10-K FY2026, notes on revenues and segments. Latest quarter: 10-Q to 31 Aug 2026.

Cloud infrastructure

$18.1bn

27% of revenue

+77% in a year

Computing power for rent, increasingly for AI. Already 38% of revenue in the latest quarter.

Oracle Strategic Review 01 Oracle at a glance

2

What does Oracle sell, and where does it run?

Revenue by line, fiscal year to 31 May 2026, change on the year before: Oracle 10-K FY2026, notes on revenues and segments. Latest quarter: 10-Q to 31 Aug 2026.

Cloud infrastructure

$18.1bn

27% of revenue

+77% in a year

Computing power for rent, increasingly for AI. Already 38% of revenue in the latest quarter.

Cloud applications

$15.9bn

24% of revenue

+11% in a year

Business software by subscription: Fusion ERP, NetSuite, Oracle Health.

Oracle Strategic Review 01 Oracle at a glance

2

What does Oracle sell, and where does it run?

Revenue by line, fiscal year to 31 May 2026, change on the year before: Oracle 10-K FY2026, notes on revenues and segments. Latest quarter: 10-Q to 31 Aug 2026.

Cloud infrastructure

$18.1bn

27% of revenue

+77% in a year

Computing power for rent, increasingly for AI. Already 38% of revenue in the latest quarter.

Cloud applications

$15.9bn

24% of revenue

+11% in a year

Business software by subscription: Fusion ERP, NetSuite, Oracle Health.

Software licences and support

$24.5bn

36% of revenue

−1% in a year

Oracle Database, Java, middleware on the customer's own machines. $19.8bn is support, renewed every year.

Oracle Strategic Review 01 Oracle at a glance

2

What does Oracle sell, and where does it run?

Revenue by line, fiscal year to 31 May 2026, change on the year before: Oracle 10-K FY2026, notes on revenues and segments. Latest quarter: 10-Q to 31 Aug 2026.

Cloud infrastructure

$18.1bn

27% of revenue

+77% in a year

Computing power for rent, increasingly for AI. Already 38% of revenue in the latest quarter.

Cloud applications

$15.9bn

24% of revenue

+11% in a year

Business software by subscription: Fusion ERP, NetSuite, Oracle Health.

Software licences and support

$24.5bn

36% of revenue

−1% in a year

Oracle Database, Java, middleware on the customer's own machines. $19.8bn is support, renewed every year.

Hardware and services

$8.8bn

13% of revenue

+8% in a year

Engineered systems such as Exadata, and consulting.

Oracle Strategic Review 01 Oracle at a glance

2

Seen from above: 45 public cloud regions in 27 countries

Public commercial regions listed in Oracle's cloud documentation (October 2026), placed at city level. Government, dedicated and partner-hosted regions are not on the list, and neither are the AI campuses still under construction. Night view: NASA Black Marble.

Oracle Strategic Review 01 Oracle at a glance

2

Seen from above: 45 public cloud regions in 27 countries

Public commercial regions listed in Oracle's cloud documentation (October 2026), placed at city level. Government, dedicated and partner-hosted regions are not on the list, and neither are the AI campuses still under construction. Night view: NASA Black Marble.

Business software and, more and more, computing power for rent.

Of all these services, which ones matter for us?

Oracle Strategic Review 02 Industries and benchmarks

3

Which of the businesses Oracle is in pays the most?

WHAT ORACLE SELLS

THE INDUSTRY

Software

applications, licences and support

Software

Cloud infrastructure

computing power for rent

no industry of its own in the data: these are its three closest relatives, all built on physical assets

Telecom services

Power

Data-centre landlords

Hardware and services

engineered systems, consulting

IT services

Industries: Damodaran Online, US industry averages, January 2026 (operating margin, return on invested capital, cost of capital). Damodaran has no cloud-infrastructure industry: the three asset-heavy industries are our choice of closest relatives. Oracle: operating income over total revenues, 10-K FY2026; it does not publish an operating margin by line.

Oracle Strategic Review 02 Industries and benchmarks

3

Which of the businesses Oracle is in pays the most?

WHAT ORACLE SELLS

THE INDUSTRY

Software

applications, licences and support

Software

Cloud infrastructure

computing power for rent

no industry of its own in the data: these are its three closest relatives, all built on physical assets

Telecom services

Power

Data-centre landlords

Hardware and services

engineered systems, consulting

IT services

Industries: Damodaran Online, US industry averages, January 2026 (operating margin, return on invested capital, cost of capital). Damodaran has no cloud-infrastructure industry: the three asset-heavy industries are our choice of closest relatives. Oracle: operating income over total revenues, 10-K FY2026; it does not publish an operating margin by line.

OPERATING MARGIN

what is left of each $100 of sales: industry average

0%

10%

20%

30%

40%

33%

20%

22%

25%

7%

Oracle Strategic Review 02 Industries and benchmarks

3

Which of the businesses Oracle is in pays the most?

WHAT ORACLE SELLS

THE INDUSTRY

Software

applications, licences and support

Software

Cloud infrastructure

computing power for rent

no industry of its own in the data: these are its three closest relatives, all built on physical assets

Telecom services

Power

Data-centre landlords

Hardware and services

engineered systems, consulting

IT services

Industries: Damodaran Online, US industry averages, January 2026 (operating margin, return on invested capital, cost of capital). Damodaran has no cloud-infrastructure industry: the three asset-heavy industries are our choice of closest relatives. Oracle: operating income over total revenues, 10-K FY2026; it does not publish an operating margin by line.

OPERATING MARGIN

what is left of each $100 of sales: industry average

0%

10%

20%

30%

40%

33%

20%

22%

25%

7%

Oracle 31% whole company

Oracle Strategic Review 02 Industries and benchmarks

3

Which of the businesses Oracle is in pays the most?

WHAT ORACLE SELLS

THE INDUSTRY

Software

applications, licences and support

Software

Cloud infrastructure

computing power for rent

no industry of its own in the data: these are its three closest relatives, all built on physical assets

Telecom services

Power

Data-centre landlords

Hardware and services

engineered systems, consulting

IT services

Industries: Damodaran Online, US industry averages, January 2026 (operating margin, return on invested capital, cost of capital). Damodaran has no cloud-infrastructure industry: the three asset-heavy industries are our choice of closest relatives. Oracle: operating income over total revenues, 10-K FY2026; it does not publish an operating margin by line.

OPERATING MARGIN

what is left of each $100 of sales: industry average

0%

10%

20%

30%

40%

33%

20%

22%

25%

7%

Oracle 31% whole company

RETURN ON CAPITAL MINUS ITS COST

ROIC − WACC, in points

0

+10

+20

destroys value ←

→ creates value

+20

29% − 9%

+7

12% − 5%

+2

7% − 5%

−2

3% − 5%

+18

26% − 8%

Oracle Strategic Review 02 Industries and benchmarks

3

Which of the businesses Oracle is in pays the most?

WHAT ORACLE SELLS

THE INDUSTRY

Software

applications, licences and support

Software

Cloud infrastructure

computing power for rent

no industry of its own in the data: these are its three closest relatives, all built on physical assets

Telecom services

Power

Data-centre landlords

Hardware and services

engineered systems, consulting

IT services

Industries: Damodaran Online, US industry averages, January 2026 (operating margin, return on invested capital, cost of capital). Damodaran has no cloud-infrastructure industry: the three asset-heavy industries are our choice of closest relatives. Oracle: operating income over total revenues, 10-K FY2026; it does not publish an operating margin by line.

OPERATING MARGIN

what is left of each $100 of sales: industry average

0%

10%

20%

30%

40%

33%

20%

22%

25%

7%

Oracle 31% whole company

RETURN ON CAPITAL MINUS ITS COST

ROIC − WACC, in points

0

+10

+20

destroys value ←

→ creates value

+20

29% − 9%

+7

12% − 5%

+2

7% − 5%

−2

3% − 5%

+18

26% − 8%

Oracle Strategic Review 02 Industries and benchmarks

3

Which of the businesses Oracle is in pays the most?

WHAT ORACLE SELLS

THE INDUSTRY

Software

applications, licences and support

Software

Cloud infrastructure

computing power for rent

no industry of its own in the data: these are its three closest relatives, all built on physical assets

Telecom services

Power

Data-centre landlords

Hardware and services

engineered systems, consulting

IT services

Industries: Damodaran Online, US industry averages, January 2026 (operating margin, return on invested capital, cost of capital). Damodaran has no cloud-infrastructure industry: the three asset-heavy industries are our choice of closest relatives. Oracle: operating income over total revenues, 10-K FY2026; it does not publish an operating margin by line.

OPERATING MARGIN

what is left of each $100 of sales: industry average

0%

10%

20%

30%

40%

33%

20%

22%

25%

7%

Oracle 31% whole company

RETURN ON CAPITAL MINUS ITS COST

ROIC − WACC, in points

0

+10

+20

destroys value ←

→ creates value

+20

29% − 9%

+7

12% − 5%

+2

7% − 5%

−2

3% − 5%

+18

26% − 8%

Software: it earns 20 points more than its capital costs, and it is 60% of Oracle's revenue.

Oracle Strategic Review 03 From software to capital

4

Where is Oracle putting its money?

Capital expenditures per cash flow statement over total revenues; fixed assets at cost, before depreciation, by class. Fiscal years end 31 May. The total includes land and furniture ($1.8bn), not drawn. Source: Oracle annual reports (10-K), FY2014 to FY2026; classes cross-checked against the FY2026 note on property.

FY14

$2

FY15

FY16

FY17

FY18

FY19

FY20

FY21

$5

FY22

FY23

$17

$37

$83

CAPEX FOR EVERY $100 OF REVENUE

For a decade, $2 to $5. The software business needed almost no equipment.

FY24

FY25

FY26

WHAT ORACLE OWNS, $BN AT COST

$123bn

Servers and networks

Buildings and fit-out

Under construction, for data centres

Oracle Strategic Review 03 From software to capital

4

Where is Oracle putting its money?

Capital expenditures per cash flow statement over total revenues; fixed assets at cost, before depreciation, by class. Fiscal years end 31 May. The total includes land and furniture ($1.8bn), not drawn. Source: Oracle annual reports (10-K), FY2014 to FY2026; classes cross-checked against the FY2026 note on property.

FY24

FY25

FY26

WHAT ORACLE OWNS, $BN AT COST

$123bn

Servers and networks

Buildings and fit-out

Under construction, for data centres

+$6.1bn

+$25bn

+$63bn

ADDED TO FIXED ASSETS IN EACH OF THE LAST THREE YEARS

Oracle Strategic Review 03 From software to capital

4

Where is Oracle putting its money?

Capital expenditures per cash flow statement over total revenues; fixed assets at cost, before depreciation, by class. Fiscal years end 31 May. The total includes land and furniture ($1.8bn), not drawn. Source: Oracle annual reports (10-K), FY2014 to FY2026; classes cross-checked against the FY2026 note on property.

WHERE EACH YEAR'S INVESTMENT WENT: ADDITIONS TO FIXED ASSETS, AT COST

$6.1bn

FY2024

cloud infrastructure: 13% of revenue

$25bn

FY2025

cloud infrastructure: 18% of revenue

$63bn

FY2026

cloud infrastructure: 27% of revenue

Oracle Strategic Review 03 From software to capital

4

Where is Oracle putting its money?

Capital expenditures per cash flow statement over total revenues; fixed assets at cost, before depreciation, by class. Fiscal years end 31 May. The total includes land and furniture ($1.8bn), not drawn. Source: Oracle annual reports (10-K), FY2014 to FY2026; classes cross-checked against the FY2026 note on property.

WHERE EACH YEAR'S INVESTMENT WENT: ADDITIONS TO FIXED ASSETS, AT COST

$6.1bn

FY2024

cloud infrastructure: 13% of revenue

$25bn

FY2025

cloud infrastructure: 18% of revenue

$63bn

FY2026

cloud infrastructure: 27% of revenue

61%

$3.7bn

servers and networks

10%

$0.6bn

buildings and fit-out

29%

$1.8bn

under construction

38%

$9.4bn

servers and networks

18%

$4.4bn

buildings and fit-out

44%

$11bn

under construction

46%

$29bn

servers and networks

16%

$10bn

buildings and fit-out

37%

$23bn

under construction

Oracle Strategic Review 03 From software to capital

4

Where is Oracle putting its money?

Capital expenditures per cash flow statement over total revenues; fixed assets at cost, before depreciation, by class. Fiscal years end 31 May. The total includes land and furniture ($1.8bn), not drawn. Source: Oracle annual reports (10-K), FY2014 to FY2026; classes cross-checked against the FY2026 note on property.

WHERE EACH YEAR'S INVESTMENT WENT: ADDITIONS TO FIXED ASSETS, AT COST

$6.1bn

FY2024

cloud infrastructure: 13% of revenue

$25bn

FY2025

cloud infrastructure: 18% of revenue

$63bn

FY2026

cloud infrastructure: 27% of revenue

61%

$3.7bn

servers and networks

10%

$0.6bn

buildings and fit-out

29%

$1.8bn

under construction

38%

$9.4bn

servers and networks

18%

$4.4bn

buildings and fit-out

44%

$11bn

under construction

46%

$29bn

servers and networks

16%

$10bn

buildings and fit-out

37%

$23bn

under construction

Into cloud infrastructure: Oracle is moving from traditional software toward capital-intensive cloud infrastructure.

So we go deep on two

Enterprise software, where Oracle earns

Cloud infrastructure for AI, where it invests

Oracle Strategic Review 04 The two industries

5

3

questions about these two industries

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Oracle Strategic Review 04 The two industries

5

3

questions about these two industries

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

1

How do they work?

Where the revenue comes from, and what it costs to earn it.

page 6

Oracle Strategic Review 04 The two industries

5

3

questions about these two industries

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

1

How do they work?

Where the revenue comes from, and what it costs to earn it.

page 6

2

How do you compete in them?

Who the competitors are, and where Oracle sits among them.

pages 7 and 8

Oracle Strategic Review 04 The two industries

5

3

questions about these two industries

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

1

How do they work?

Where the revenue comes from, and what it costs to earn it.

page 6

2

How do you compete in them?

Who the competitors are, and where Oracle sits among them.

pages 7 and 8

3

How do you win?

The winning parameter of each industry, and whether Oracle is winning.

page 9

Oracle Strategic Review 04 The two industries

6

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do the two industries make money?

</>

Enterprise software

60% of Oracle's revenue, growing 4% a year

AI

Cloud infrastructure for AI

27% of Oracle's revenue, growing 77% a year

REVENUE

COSTS

REVENUE

COSTS

Oracle 10-K FY2026 (revenue by line, depreciation, interest, research and sales costs, fixed assets at cost) and 10-Q to 31 Aug 2026 (contracts signed, payments in advance, useful life of servers, leases and purchase commitments, margin of the cloud and software business before research, overheads and interest).

Oracle Strategic Review 04 The two industries

6

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do the two industries make money?

</>

Enterprise software

60% of Oracle's revenue, growing 4% a year

AI

Cloud infrastructure for AI

27% of Oracle's revenue, growing 77% a year

REVENUE

COSTS

REVENUE

COSTS

Oracle 10-K FY2026 (revenue by line, depreciation, interest, research and sales costs, fixed assets at cost) and 10-Q to 31 Aug 2026 (contracts signed, payments in advance, useful life of servers, leases and purchase commitments, margin of the cloud and software business before research, overheads and interest).

Paid again every year

Support contracts

Subscriptions

New licences

Capacity reserved for years, often paid in advance

Contracts signed

Revenue comes later

Paid in advance

Oracle Strategic Review 04 The two industries

6

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do the two industries make money?

</>

Enterprise software

60% of Oracle's revenue, growing 4% a year

AI

Cloud infrastructure for AI

27% of Oracle's revenue, growing 77% a year

REVENUE

COSTS

REVENUE

COSTS

Oracle 10-K FY2026 (revenue by line, depreciation, interest, research and sales costs, fixed assets at cost) and 10-Q to 31 Aug 2026 (contracts signed, payments in advance, useful life of servers, leases and purchase commitments, margin of the cloud and software business before research, overheads and interest).

Paid again every year

Support contracts

Subscriptions

New licences

Capacity reserved for years, often paid in advance

Contracts signed

Revenue comes later

Paid in advance

People and code

Research and development

Sales and marketing

Equipment

Scalable, very low capex: a new customer costs almost nothing.

Machines, buildings, power, and the money to buy them

Machines

Depreciation

Buildings

Power and cooling

Interest

Scales only by building: each new customer needs new machines first.

Oracle Strategic Review 04 The two industries

6

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do the two industries make money?

</>

Enterprise software

60% of Oracle's revenue, growing 4% a year

AI

Cloud infrastructure for AI

27% of Oracle's revenue, growing 77% a year

REVENUE

COSTS

REVENUE

COSTS

Oracle 10-K FY2026 (revenue by line, depreciation, interest, research and sales costs, fixed assets at cost) and 10-Q to 31 Aug 2026 (contracts signed, payments in advance, useful life of servers, leases and purchase commitments, margin of the cloud and software business before research, overheads and interest).

Paid again every year

Support contracts

Subscriptions

New licences

Capacity reserved for years, often paid in advance

Contracts signed

Revenue comes later

Paid in advance

People and code

Research and development

Sales and marketing

Equipment

Scalable, very low capex: a new customer costs almost nothing.

Machines, buildings, power, and the money to buy them

Machines

Depreciation

Buildings

Power and cooling

Interest

Scales only by building: each new customer needs new machines first.

The mix is already visible in the margin: 64%, 63%, 59%, now 55%. Each new dollar of revenue keeps 39 cents; a year ago the business kept 60.

Software sells the same code again and again; AI cloud has to build before it can sell.

Oracle Strategic Review 04 The two industries

7

1 How do they work? 2 How do you compete in them? 3 How do you win?

Who competes with Oracle?

Business apps

Databases

General cloud

AI computing

Data-centre space

Own AI models

Own AI chips

Overlap

Oracle

Direct, across the stack: they sell 3 or 4 of the 4 things Oracle sells

Microsoft

4 of 4

Amazon (AWS)

3 of 4

Alphabet

3 of 4

Direct in one or two layers

IBM

2 of 4

SAP

2 of 4

Salesforce

1 of 4

Workday

1 of 4

ServiceNow

1 of 4

Snowflake

1 of 4

Palantir

1 of 4

CoreWeave

1 of 4

Nebius

1 of 4

IREN

1 of 4

WhiteFiber

1 of 4

They rent out the buildings: Oracle’s landlords, and a substitute when the customer brings its own machines

Applied Digital

0 of 4

Equinix

0 of 4

Digital Realty

0 of 4

Indirect: the customer does it in-house. Own software, own data centres.

● = the company sells it to outside customers (for chips and models: it develops its own). Overlap = how many of the four things Oracle sells the company also sells. Source: latest annual reports, business descriptions and segments; our reading, at the level of product lines.

Oracle Strategic Review 04 The two industries

7

1 How do they work? 2 How do you compete in them? 3 How do you win?

Who competes with Oracle?

Business apps

Databases

General cloud

AI computing

Data-centre space

Own AI models

Own AI chips

Overlap

Oracle

Direct, across the stack: they sell 3 or 4 of the 4 things Oracle sells

Microsoft

4 of 4

Amazon (AWS)

3 of 4

Alphabet

3 of 4

Direct in one or two layers

IBM

2 of 4

SAP

2 of 4

Salesforce

1 of 4

Workday

1 of 4

ServiceNow

1 of 4

Snowflake

1 of 4

Palantir

1 of 4

CoreWeave

1 of 4

Nebius

1 of 4

IREN

1 of 4

WhiteFiber

1 of 4

They rent out the buildings: Oracle’s landlords, and a substitute when the customer brings its own machines

Applied Digital

0 of 4

Equinix

0 of 4

Digital Realty

0 of 4

Indirect: the customer does it in-house. Own software, own data centres.

● = the company sells it to outside customers (for chips and models: it develops its own). Overlap = how many of the four things Oracle sells the company also sells. Source: latest annual reports, business descriptions and segments; our reading, at the level of product lines.

Only the three hyperscalers meet Oracle in three layers or more. Only Microsoft in all four.

Oracle Strategic Review 04 The two industries

8

1 How do they work? 2 How do you compete in them? 3 How do you win?

Where does Oracle sit?

SOFTWARE

applications, databases

INFRASTRUCTURE

computing power, buildings

FULL STACK many layers, plus its own chips and models

SPECIALIST

sells one thing

Microsoft

Amazon (AWS)

Alphabet

IBM

SAP

Salesforce

Workday

ServiceNow

Snowflake

Palantir

CoreWeave

Nebius

IREN

WhiteFiber

Applied Digital

Equinix

Digital Realty

Positions computed from our competitor table (previous page). Left to right: the average layer a company sells, from business applications to data-centre space. Bottom to top: how many of the table's seven boxes it fills. Companies with the same dots sit together.

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

WHY

Code is written once and sold many times. The resource that generates the profit is the people who write it and sell it.

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

WHY

Code is written once and sold many times. The resource that generates the profit is the people who write it and sell it.

WHAT IT SAYS

Microsoft

$2.49

Oracle, FY2021

$1.07

SAP

$0.62

Salesforce

$0.41

ServiceNow

$0.25

Workday

$0.14

FY2021: Oracle was almost only software. Rivals: latest year.

Oracle since: 0.72 · 0.75 · 0.89 · 0.95 · 1.11 (the last includes the infrastructure).

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

WHY

Code is written once and sold many times. The resource that generates the profit is the people who write it and sell it.

WHAT IT SAYS

Microsoft

$2.49

Oracle, FY2021

$1.07

SAP

$0.62

Salesforce

$0.41

ServiceNow

$0.25

Workday

$0.14

FY2021: Oracle was almost only software. Rivals: latest year.

Oracle since: 0.72 · 0.75 · 0.89 · 0.95 · 1.11 (the last includes the infrastructure).

YES

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

WHY

Code is written once and sold many times. The resource that generates the profit is the people who write it and sell it.

WHAT IT SAYS

Microsoft

$2.49

Oracle, FY2021

$1.07

SAP

$0.62

Salesforce

$0.41

ServiceNow

$0.25

Workday

$0.14

FY2021: Oracle was almost only software. Rivals: latest year.

Oracle since: 0.72 · 0.75 · 0.89 · 0.95 · 1.11 (the last includes the infrastructure).

YES

INDICATOR

Return on the capital added

= profit after tax added ÷ capital added, over the last two fiscal years

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

WHY

Code is written once and sold many times. The resource that generates the profit is the people who write it and sell it.

WHAT IT SAYS

Microsoft

$2.49

Oracle, FY2021

$1.07

SAP

$0.62

Salesforce

$0.41

ServiceNow

$0.25

Workday

$0.14

FY2021: Oracle was almost only software. Rivals: latest year.

Oracle since: 0.72 · 0.75 · 0.89 · 0.95 · 1.11 (the last includes the infrastructure).

YES

INDICATOR

Return on the capital added

= profit after tax added ÷ capital added, over the last two fiscal years

WHY

Capacity is paid for first and pays back only if it fills up above its cost. The resource that generates the profit is the capital put into machines and sites.

Why not plain ROIC: it mixes the old software business with the new bet. Looking only at what was added isolates the bet (we come back to it in the foresights).

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

WHY

Code is written once and sold many times. The resource that generates the profit is the people who write it and sell it.

WHAT IT SAYS

Microsoft

$2.49

Oracle, FY2021

$1.07

SAP

$0.62

Salesforce

$0.41

ServiceNow

$0.25

Workday

$0.14

FY2021: Oracle was almost only software. Rivals: latest year.

Oracle since: 0.72 · 0.75 · 0.89 · 0.95 · 1.11 (the last includes the infrastructure).

YES

INDICATOR

Return on the capital added

= profit after tax added ÷ capital added, over the last two fiscal years

WHY

Capacity is paid for first and pays back only if it fills up above its cost. The resource that generates the profit is the capital put into machines and sites.

Why not plain ROIC: it mixes the old software business with the new bet. Looking only at what was added isolates the bet (we come back to it in the foresights).

WHAT IT SAYS

Alphabet with advertising

29%

Microsoft with Office

18%

AWS Amazon's cloud alone

16%

Oracle with its software

7%

Pink band: what the capital costs (WACC) each year, 7% to 9%

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

WHY

Code is written once and sold many times. The resource that generates the profit is the people who write it and sell it.

WHAT IT SAYS

Microsoft

$2.49

Oracle, FY2021

$1.07

SAP

$0.62

Salesforce

$0.41

ServiceNow

$0.25

Workday

$0.14

FY2021: Oracle was almost only software. Rivals: latest year.

Oracle since: 0.72 · 0.75 · 0.89 · 0.95 · 1.11 (the last includes the infrastructure).

YES

INDICATOR

Return on the capital added

= profit after tax added ÷ capital added, over the last two fiscal years

WHY

Capacity is paid for first and pays back only if it fills up above its cost. The resource that generates the profit is the capital put into machines and sites.

Why not plain ROIC: it mixes the old software business with the new bet. Looking only at what was added isolates the bet (we come back to it in the foresights).

WHAT IT SAYS

Alphabet with advertising

29%

Microsoft with Office

18%

AWS Amazon's cloud alone

16%

Oracle with its software

7%

Pink band: what the capital costs (WACC) each year, 7% to 9%

NO

Oracle Strategic Review 04 The two industries

9

1 How do they work? 2 How do you compete in them? 3 How do you win?

How do you win in each industry, and is Oracle winning?

</>

Enterprise software

where Oracle earns

AI

Cloud infrastructure for AI

where it invests

Company annual reports (10-K, 20-F), latest fiscal year; our calculations. Operating income after 21% tax; invested capital = equity + debt + leases − cash; for AWS, the segment's operating income and assets. Capital added: over the last two fiscal years, sites under construction included. Cost of capital: Damodaran, January 2026.

INDICATOR

Operating profit per dollar of R&D and sales

= operating income ÷ (research and development + sales and marketing)

WHY

Code is written once and sold many times. The resource that generates the profit is the people who write it and sell it.

WHAT IT SAYS

Microsoft

$2.49

Oracle, FY2021

$1.07

SAP

$0.62

Salesforce

$0.41

ServiceNow

$0.25

Workday

$0.14

FY2021: Oracle was almost only software. Rivals: latest year.

Oracle since: 0.72 · 0.75 · 0.89 · 0.95 · 1.11 (the last includes the infrastructure).

YES

INDICATOR

Return on the capital added

= profit after tax added ÷ capital added, over the last two fiscal years

WHY

Capacity is paid for first and pays back only if it fills up above its cost. The resource that generates the profit is the capital put into machines and sites.

Why not plain ROIC: it mixes the old software business with the new bet. Looking only at what was added isolates the bet (we come back to it in the foresights).

WHAT IT SAYS

Alphabet with advertising

29%

Microsoft with Office

18%

AWS Amazon's cloud alone

16%

Oracle with its software

7%

Pink band: what the capital costs (WACC) each year, 7% to 9%

NO

In software, yes. In AI cloud, no, not yet: the lowest return of the four, on the biggest bet.

Oracle Strategic Review 04 Positioning

10

Which positioning is Oracle moving to?

VALUE DISCIPLINE →

COMPETITIVE

STANCE ↓

PRODUCT

LEADERSHIP

OPERATIONAL

EXCELLENCE

CUSTOMER

INTIMACY

DIFFERENTIATION

COST

LEADERSHIP

BLUE OCEAN

Microsoft

Amazon

Alphabet

own chips and AI models

ORACLE

today, in AI cloud

also here: CoreWeave

Oracle

until 2021

The risk:

capacity becomes a

commodity

Not open: four large players already compete

POSITIONING ARCHETYPES

Until 2021

Category Leader

Solutions Provider

Today

Platform Provider

Fast Follower

Still differentiation, but from customer intimacy to operational excellence. The risk: cost leadership.

Vision, mission and 5 foresights

To know if the bet is the right one, we need scenarios.

Oracle Strategic Review 06 Five futures

11

How we picked five futures

Bubble

Open models

Passport

Megawatt

Commodity

HORIZONS: THREE DEADLINES ALREADY IN ORACLE'S ACCOUNTS

We picked the scenarios from the deadlines of the resources this industry runs on, then analysed how each foresight changes those same resources.

2026

today

2031

cloud contracts run 1 to 5 years

2036

machines are depreciated over 6 years

2041

leases run 15 to 19 years

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

The AI bubble bursts. The buildings stay

2031 · IN FIVE YEARS: TODAY'S CLOUD CONTRACTS HAVE ENDED

AI companies spend more on computers than they earn, and banks stop lending them money. OpenAI, Oracle's biggest customer, cuts its order. Oracle is left paying for huge data centres it can no longer fill.

“

Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes.

Sam Altman, CEO of OpenAI, Oracle's largest customer (to reporters; NBC News, 18 Aug 2025)

Customer data

+1

Code, people

0

Contracts

−3

Machines

−2

Sites

−2

Power

−1

Capital

−3

SIGNAL TO WATCH

The first hyperscaler rewarded by the market for cutting capex.

Data-centre debt drying up.

Credit spreads widening.

Oracle 10-K FY2026 and 10-Q Q1 FY2027; press on the OpenAI share of the backlog (Sept 2026); Seattle Times (13 Jan 2002); NBC News (18 Aug 2025).

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

The model comes home: open models run where the data is

2036 · IN TEN YEARS: TODAY'S MACHINES ARE LONG REPLACED

Free, open AI models become good enough for everyday work. A normal company runs its AI on a small machine in its own office, next to its own data, instead of renting giant data centres. Oracle's databases matter more; its giant campuses matter less.

“

The variety of tasks in business workflows and the need for greater accuracy are driving the shift towards specialized models fine-tuned on specific functions or domain data.

Sumit Agarwal, VP Analyst, Gartner (9 Apr 2025)

Customer data

+2

Code, people

+1

Contracts

−2

Machines

−1

Sites

−2

Power

−1

Capital

0

SIGNAL TO WATCH

The share of company work done on open models.

OpenRouter, "The Token State of Play" (22 Sep 2026); NVIDIA (DGX Spark, Oct 2025); Menlo Ventures (mid-2025); Gartner (9 Apr 2025).

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

AI has a passport: every country runs its own

2036 · IN TEN YEARS: TODAY'S MACHINES ARE LONG REPLACED

Governments want AI they control: it must run inside their borders, on a provider that no foreign government can switch off. Countries that trust the US may buy from Oracle; the others buy from local companies, even if it costs more.

“

Every country needs to own the production of their own intelligence.

Jensen Huang, CEO of NVIDIA (World Governments Summit, Dubai, 12 Feb 2024)

Customer data

+2

Code, people

+1

Contracts

−1

Machines

0

Sites

+1

Power

0

Capital

0

SIGNAL TO WATCH

A European government giving a sovereign region to an American provider, or US export rules extending from models to cloud services.

Axios (12 Jun 2026); The Register (16 Sep 2024); Oracle public region list (Oct 2026); European Commission (17 Apr 2026).

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

The megawatt is the new chip

2036 · IN TEN YEARS: TODAY'S MACHINES ARE LONG REPLACED

Electricity, not chips, becomes what limits AI. Data centres can only go where there is enough power and the local town agrees. Sites that already have power become very valuable: good news for Oracle, if its sites come with power.

“

You may actually have a bunch of chips sitting in inventory that I cannot plug in.

Satya Nadella, CEO of Microsoft (BG2 podcast, Nov 2025)

Customer data

0

Code, people

0

Contracts

+1

Machines

−1

Sites

+2

Power

+2

Capital

−1

SIGNAL TO WATCH

Energy per unit of AI work falling faster than demand grows.

IEA (10 Apr 2025); Data Center Watch (Q1 2026); Oracle 10-K FY2026; BG2 podcast via Wccftech.

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

Oracle Strategic Review 06 Five futures

11

How we picked five futures

2031

2036

2041

Computing power becomes a commodity

2041 · IN FIFTEEN YEARS: THE FIRST LEASES SIGNED TODAY EXPIRE

Computing power becomes an ordinary product, like electricity: the same from every seller, bought at the day's price from whoever is cheapest. Nobody signs long contracts any more, and selling it earns about as little as selling power.

“

As AI gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity we just can't get enough of.

Satya Nadella, CEO of Microsoft (LinkedIn and X, 26 Jan 2025)

Customer data

+1

Code, people

0

Contracts

−2

Machines

−3

Sites

−2

Power

0

Capital

−2

SIGNAL TO WATCH

The rental price of an hour of GPU.

Stanford AI Index 2025; OpenRouter (22 Sep 2026); Damodaran (Jan 2026); Oracle 10-K, our calculation on page 9.

Oracle Strategic Review 06 Five futures

12

What the five futures have in common

2031 Bubble −10

2036 Open models −3

2036 Passport +3

2036 Megawatt +3

2041 Commodity −8

Customer data +6 gains in 4, loses in none

Code and people +2 gains in 2, loses in none

Power 0 gains in 1, loses in 2

Sites −3 gains in 2, loses in 3

Capital −6 loses in 3, gains in none

Capacity contracts −7 gains in 1, loses in 4

Machines −7 loses in 4, gains in none

For each future we scored how much each of Oracle's seven resources gains or loses (green gains, red loses). The resources that move the most are the ones our vision and mission must aim at.

Five futures, by horizon · impact

Seven resources · sum of the five scores

Our scoring table: each future scored from −3 to +3 on the seven resources Oracle runs on (the revenue and cost lines of page 6). Line width = points; green gains, red loses. Capital spending per $100 of revenue: Oracle 10-K FY2026.

Oracle Strategic Review 06 Five futures

12

What the five futures have in common

2031 Bubble −10

2036 Open models −3

2036 Passport +3

2036 Megawatt +3

2041 Commodity −8

Customer data +6 gains in 4, loses in none

Code and people +2 gains in 2, loses in none

Power 0 gains in 1, loses in 2

Sites −3 gains in 2, loses in 3

Capital −6 loses in 3, gains in none

Capacity contracts −7 gains in 1, loses in 4

Machines −7 loses in 4, gains in none

For each future we scored how much each of Oracle's seven resources gains or loses (green gains, red loses). The resources that move the most are the ones our vision and mission must aim at.

Five futures, by horizon · impact

Seven resources · sum of the five scores

Our scoring table: each future scored from −3 to +3 on the seven resources Oracle runs on (the revenue and cost lines of page 6). Line width = points; green gains, red loses. Capital spending per $100 of revenue: Oracle 10-K FY2026.

Oracle Strategic Review 06 Five futures

12

What the five futures have in common

2031 Bubble −10

2036 Open models −3

2036 Passport +3

2036 Megawatt +3

2041 Commodity −8

Customer data +6 gains in 4, loses in none

Code and people +2 gains in 2, loses in none

Power 0 gains in 1, loses in 2

Sites −3 gains in 2, loses in 3

Capital −6 loses in 3, gains in none

Capacity contracts −7 gains in 1, loses in 4

Machines −7 loses in 4, gains in none

For each future we scored how much each of Oracle's seven resources gains or loses (green gains, red loses). The resources that move the most are the ones our vision and mission must aim at.

Five futures, by horizon · impact

Seven resources · sum of the five scores

Our scoring table: each future scored from −3 to +3 on the seven resources Oracle runs on (the revenue and cost lines of page 6). Line width = points; green gains, red loses. Capital spending per $100 of revenue: Oracle 10-K FY2026.

Every future touches the sites and the contracts, in opposite directions. Only one resource gains in almost all of them: the customer's data.

Oracle Strategic Review 07 Vision and ambition

13

Vision

“

Oracle provides products and services that build, run and support enterprise information technology (IT) frameworks.

Mission

“

Our mission is to help people see data in new ways, discover insights, unlock endless possibilities.

Oracle says data, but it spends on capacity.

WHAT ORACLE SAYS

THE NEW ORACLE

The mission is right. The plan does not follow it.

oracle.com/corporate (Oct 2026); Oracle 10-K FY2026.

VISION

“

By 2031, the AI that works on the world's most important data runs on Oracle: next to the data, inside the customer's borders, on power we have secured.

MISSION

“

We keep the data that companies and countries cannot afford to lose, and bring AI to it where they choose, under their rules.

Oracle Strategic Review 07 Vision and ambition

13

The new Oracle, outside and inside

External · to customers and countries

Internal · to Oracle's people and capital

Vision

“

By 2031, the AI that works on the world's most important data runs on Oracle: next to the data, inside the customer's borders, on power we have secured.

“

By 2031, every dollar Oracle invests earns more than it costs, because we build only where our customers' data, their trust and secured power already are.

Mission

“

We keep the data that companies and countries cannot afford to lose, and bring AI to it where they choose, under their rules.

“

We put our people, capital and sites behind the data customers keep with us: no new capacity without a signed contract and the power to run it.

Oracle Strategic Review 07 Vision and ambition

13

Oracle in 2031, in five numbers

VISION

“

By 2031, the AI that works on the world's most important data runs on Oracle: next to the data, inside the customer's borders, on power we have secured.

MISSION

“

We keep the data that companies and countries cannot afford to lose, and bring AI to it where they choose, under their rules.

Dimension

Measure of success

From

To

Financial · Capital

Return on added capital in AI cloud

7.1% (FY24 to FY26)

18% by FY31

Financial · Capital

Capital spending per $100 of revenue

$83 (FY26)

$35 by FY31

Customer · Security

Share of signed contracts tied to the largest customer

About half (Sep 2026)

Under a quarter by FY31