Oracle Q2 FY2026 — Revenue Miss, AI Backlog Surge, and a 14% Drop: Value Reset or Warning Sign?

Oracle’s Q2 FY2026 results showed mixed performance with revenue at $16.06B slightly below expectations, while adjusted EPS at $2.26 was aided by a one-time gain. A significant $523B RPO backlog indicates strong future demand, yet stock fell over 10% to ~$199 amid concerns over profitability and capital intensity.

TL;DR Summary

Oracle (NYSE: ORCL) reported mixed Q2 FY2026 results: revenue came in slightly below expectations, adjusted EPS beat but was boosted by a one-time gain, and OCI continued strong but not hyper-scale acceleration. The standout metric was a massive $523B RPO backlog, signaling powerful long-term demand for AI and cloud infrastructure. Yet the stock still dropped over 10% after hours to ~$199 as investors recalibrated near-term profitability, cloud CapEx intensity, and the quality of earnings. Our fair value stands at $210–$215, with the pullback offering a more reasonable entry point for value-oriented investors who can tolerate AI-cycle volatility.

Quarter Recap

Oracle released its Q2 FY2026 results on December 10. Total revenue reached $16.06B, a modest YoY increase but a slight miss versus expectations. Adjusted EPS beat estimates at $2.26; however, the strength was driven by a $2.7B pretax gain from selling Oracle’s stake in Ampere Computing. OCI remained a bright spot, growing roughly 68% YoY and supported by AI training and inference demand, although growth did not exceed bullish expectations.

The biggest surprise came from Remaining Performance Obligations (RPO), which surged to $523B — one of the highest forward-demand indicators in enterprise tech. Despite this, the stock sold off sharply as investors focused more on margin pressure, heavy CapEx needs, and the softer revenue print. By late after-hours trading, Oracle shares had fallen to around $199, down more than 10%.

Key Highlights

Revenue: $16.06B, slightly below consensus
Adjusted EPS: $2.26, aided by a one-time Ampere stake sale
OCI: ~68% YoY growth, strong but not accelerating beyond expectations
RPO: Jumped to $523B, signaling multi-year cloud and AI demand
CapEx & Debt: Rising commitments for cloud infrastructure expansion
Market Reaction: Stock dropped from ~$230 to ~$199 after hours

SWOT Analysis

Oracle’s Q2 results highlight a company balancing immense long-term opportunity with near-term financial strain. While the AI infrastructure cycle is driving unprecedented backlog levels, the path to monetizing this demand profitably remains uncertain. The sell-off reflects this tension: long-term durable demand on one side, and rising costs, slower revenue, and an inflated EPS figure on the other.

Strengths (Price Impact: +6% to +12%)

Massive RPO backlog of $523B supporting multi-year revenue visibility (+3% to +5%)
Highly sticky database and support revenue base anchoring cash flow (+2% to +4%)
Strong OCI growth of ~68% YoY securing relevance in AI infrastructure (+3% to +5%)
Consistent capital returns through buybacks and dividends (+1% to +2%)

Weaknesses (Price Impact: –6% to –12%)

Revenue miss relative to AI-fueled expectations (–3% to –5%)
EPS beat driven by one-time Ampere stake sale (–2% to –4%)
Near-term margin pressure from heavy cloud infrastructure investments (–3% to –5%)
Elevated debt profile reducing financial flexibility (–1% to –2%)

Opportunities (Price Impact: +10% to +18%)

Multi-year AI infrastructure demand cycle boosting OCI adoption (+5% to +8%)
Database migration to OCI offering structural margin lift (+3% to +5%)
Cerner modernization creating long-term operating leverage (+2% to +4%)
Enterprise consolidation driving large, integrated cloud modernization deals (+2% to +3%)

Threats (Price Impact: –12% to –20%)

CapEx requirements rising to fulfill massive AI/cloud backlog (–5% to –8%)
Fierce competition from AWS, Azure, and Google Cloud (–3% to –6%)
AI contract profitability still unclear and may dilute margins (–2% to –4%)
Macro slowdown could hit enterprise IT spending (–2% to –3%)

Oracle Q2 FY2026 SWOT analysis chart showing estimated stock price impact ranges: Strengths +6% to +12%, Weaknesses –12% to –6%, Opportunities +10% to +18%, and Threats –20% to –12%, displayed on a horizontal bar chart with x-axis starting at –25%.

Valuation Scenarios

With shares falling to ~$199, Oracle now trades below our intrinsic value range. The key valuation driver is how quickly OCI can scale profitably relative to the heavy CapEx needed to support long-term AI demand. Below are three scenarios based on earnings normalization, cloud margin trajectories, and the appropriate earnings multiple for a hybrid software + cloud infrastructure business.

Bear Case — $175

OCI slows to 40–50%
CapEx stays elevated for multiple years
Core EPS normalizes lower after removing one-time gains
Multiple compresses to 15× forward EPS
Price Target: ~$175

Base Case — $215

OCI grows 55–65%
Revenue normalizes to mid-single digits
CapEx moderates by FY2027
Margins expand gradually
Valuation at ~17.5× forward EPS
Price Target: ~$215

Bull Case — $255

OCI re-accelerates to 70%+
AI contracts become margin accretive
Cloud and software synergy improves profitability
Market assigns a premium 20× forward multiple
Price Target: ~$255

Fari Value

Assigning scenario probabilities:

Bear: 30%
Base: 50%
Bull: 20%

FV = (175 x 0.3) + (215 x 0.5) + (255 x 0.2)

= 52.5 + 107.5 + 51 = 211

🎯 Probability-Weighted Fair Value = $211

Oracle Q2 FY2026 valuation scenarios chart comparing Bear case price target $175, Base case $215, and Bull case $255, with a dashed line indicating the probability-weighted fair value of $211.

Verdict

Oracle’s Q2 numbers delivered a mixed message: enormous long-term demand but weaker near-term fundamentals. The stock’s drop to ~$199 reflects investors resetting expectations for cloud profitability and earnings quality. Still, the pullback now places Oracle below our fair value estimate, creating a potentially attractive entry point for long-term, value-oriented investors who accept AI-cycle volatility. For investors seeking steady cash flow, disciplined capital returns, and long-term cloud upside, Oracle now screens more reasonable than before.

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Disclaimer

This analysis is for informational purposes only and is not financial advice. All estimates are based on publicly available company filings and earnings calls. Investors should conduct their own due diligence before making investment decisions.

Autodesk Q3 FY2026 — AI Clarity Arrives, ARR Strength Holds, and the Stock Jumps

Autodesk reported a strong Q3 FY2026, achieving 11% ARR growth and stable margins, supported by robust revenue of $1.44B. A clarified AI roadmap and increasing traction in Autodesk Platform Services bolstered investor confidence, leading to a 6.1% stock increase. The company maintains positive guidance, but potential risks remain in construction markets.

TL;DR Summary

Autodesk delivered a solid Q3 FY2026 with 11% ARR growth, stable margins, and a clearer AI roadmap that finally met investor expectations. Management reaffirmed full-year guidance and highlighted momentum in Autodesk Platform Services (APS) and generative design workflows. The market reacted positively: shares moved from $294.43 to $312.50 after hours right after the report, reflecting confidence that Autodesk is entering an early multi-year upcycle. Our fair value stands at $305, with upside tied to AI monetization and the pace of cloud platform adoption.

Quarter Recap

Autodesk reported Q3 FY2026 results on November 25, 2025, delivering an encouraging mix of growth and visibility. Revenue reached $1.44B (+10% YoY), supported by strong subscription trends and resilient renewal rates. ARR increased 11% YoY to $6.0B, outpacing expectations and stabilizing concerns around construction end markets.

Margins remained healthy, with non-GAAP operating income near $480M and EPS landing above consensus due to cost discipline and efficient R&D leverage. Free cash flow guidance was reaffirmed, and management emphasized their confidence in both APS and the early rollout of AI-assisted design features.

Key Highlights

ARR +11% YoY, ahead of expectations and supported by stable renewal trends.
Revenue +10% YoY, demonstrating resilience across AEC and manufacturing.
EPS beat driven by stronger margins and operating efficiency.
AI roadmap clarified, with early generative design and automated drafting features highlighted.
APS gaining traction, boosting attach rates and pricing power.
Mixed macro in construction, but not deteriorating.
Post-earnings reaction: stock jumped +6.1% after hours, reaching $312.50.

SWOT Analysis

Autodesk heads into 2026 with improving visibility, a stronger ARR engine, and a clearer AI monetization path. The market rewarded the company for delivering above-expectation ARR growth and reinforcing confidence in APS. Risks remain tied to construction cycles, platform migration complexity, and the pace of AI adoption across design workflows.

Strengths (+6% to +12%)

Strong ARR growth (+11%) underpins recurring revenue durability and valuation support.
Clearer AI roadmap with generative design, automated drafting, and simulation automation.
APS platform adoption improves attach rates and expands monetization layers.
EPS upside from disciplined cost structure and stable margins.
High switching costs across AEC and manufacturing keep retention rates above 100%.

Weaknesses (–3% to –7%)

Slight billings deceleration may temper short-term revenue acceleration.
AI monetization still early; revenue uplift remains modest for FY2026.
AEC macro remains mixed, affecting forward demand visibility.
SMB customers remain rate-sensitive, limiting seat expansion.
FX remains a drag on international results.

Opportunities (+8% to +15%)

AI-assisted design could enable multi-year ARPU expansion across core products.
Cloud platform transition (APS) unlocks higher-margin service layers.
Manufacturing automation demand supports Fusion 360 growth.
Global infrastructure digitization gives long-term AEC tailwinds.
Enterprise bundling increases deal sizes and contract duration.

Threats (–8% to –14%)

High valuation sensitivity: small ARR misses can lead to multiple compression.
AI-first CAD/BIM startups could challenge Autodesk’s pricing power.
Regulatory constraints around AI training data may slow product rollout.
Construction downturn risk could reduce seat expansions.
APS migration execution risks could create customer friction.

Valuation Scenarios

Autodesk’s valuation depends on the sustainability of ARR growth and the degree to which AI-enabled workflows improve ARPU. With APS adoption and AI clarity increasing, the base case assumes solid recurring revenue momentum and steadily improving free cash flow.

Bear Case — $265

ARR slows to 8%.
AI monetization slips into late 2027+.
Billings decelerate further.
Market rerates ADSK to a lower FCF multiple (20–22×).
FCF $1.9B × 22× = $265

Base Case — $305

ARR maintains 10–11% growth.
APS adoption remains strong.
Early AI features support modest 2026 ARPU uplift.
Market assigns a 24–25× FCF multiple.
$2.1B × 24.5× = $305

Bull Case — $345

AI tools drive meaningful ARPU expansion.
ARR accelerates to 12–13%.
Margins expand through automation and bundling.
FCF grows to $2.3B at a 27× multiple.
$2.3B × 27× = $345

Fair Value

= (0.25×265) + (0.50×305) + (0.25×345)
= $305 fair value

Verdict

Autodesk is transitioning into a higher-visibility, AI-enhanced software platform. Q3 FY2026 showcased the strength of its recurring model and provided the clearest AI roadmap yet. With ARR reaccelerating and APS gaining momentum, ADSK deserves a premium valuation — but near-term upside depends on the pace of AI adoption and the execution of platform migration.

At $305 fair value, Autodesk looks fairly priced with balanced risk-reward. Growth investors should monitor AI feature launches and renewal behavior as the key catalysts for FY2027 upside.

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Disclaimer

This article is for informational purposes only and does not constitute financial advice. All analysis is based on publicly available information from Autodesk’s official Q3 FY2026 financial report and earnings call. Investors should perform their own due diligence before making investment decisions.

Dell Q3 FY2025 — AI Servers Accelerate, PCs Drag, and the Stock Finds Its Fair Value

Dell’s Q3 FY2025 results showcased strong AI server demand, with revenue at $23.6B and a 9% increase in operating income. However, PC sales dropped 12%, causing a 6% stock decline post-earnings. Value investors may find it appealing as it trades near a fair value of $101, with potential growth linked to the 2026 AI PC refresh cycle.

TL;DR Summary

Dell delivered a mixed but stable Q3 FY2025 as AI servers continued to surge while the PC business remained weak. Revenue came in slightly light, yet strong ISG momentum and solid free cash flow pushed the stock from $125.92 to roughly $130 after hours. Management guided to better margins in Q4, reinforcing the view that Dell is entering a more stable phase as AI infrastructure demand grows. Our fair value estimate stands at $135, with upside tied to ISG mix improvement and the 2026 AI PC refresh cycle.

Quarter Recap

Dell reported Q3 FY2025 results on November 25, 2025, showing a company in transition. Revenue dipped modestly year over year, but ISG continued to deliver meaningful AI-driven strength. CSG remained a drag as PC shipments declined, though management noted early signs of stabilization. Free cash flow held up well, and Dell reiterated its commitment to capital returns through buybacks. Investors reacted positively, pushing the stock up about 3% in after-hours trading.

Key Highlights

AI servers were the standout again, driving growth in ISG and building a multi-quarter backlog.
PC revenue declined double digits, pressuring overall margins.
Management expects sequential margin improvement in Q4 as mix normalizes.
Free cash flow remained resilient, anchoring Dell’s valuation.
APEX and recurring-revenue models continued to gain traction, though still a smaller contributor.

SWOT Analysis

Dell’s investment case sits at the intersection of a cyclical PC recovery and a structurally expanding AI infrastructure market. The company’s cash flow profile and strong enterprise relationships give value-focused investors a stable foundation, while ISG’s AI momentum provides upside optionality. Below is the SWOT snapshot with estimated price impacts.

Strengths (+6% to +12%)

AI server demand accelerating with solid backlog visibility
Strong free cash flow supporting continued buybacks
Deep enterprise relationships and scale as AI workloads expand
Improving Q4 margin outlook based on mix normalization

Weaknesses (–4% to –8%)

PC revenue remains in decline, dragging blended margins
ISG profitability still volatile due to mix-shift in AI servers
Guidance remains conservative, capping near-term sentiment

Opportunities (+8% to +15%)

2026 enterprise AI PC refresh cycle
Growing on-prem AI infrastructure demand
Higher-margin recurring revenue through APEX
Margin expansion potential as AI server costs normalize

Threats (–10% to –18%)

Hyperscaler spending cycles remain uneven
Potential margin compression from rapid AI mix growth
Macro uncertainty affecting corporate capex
Competitive pricing pressure across ISG

SWOT price-impact range chart for Dell Q3 FY2025 showing Strengths (+6% to +12%), Weaknesses (–8% to –4%), Opportunities (+10% to +18%), and Threats (–14% to –8%), displayed as horizontal color-coded bars with a vertical zero reference line.

Valuation Scenarios

Our valuation models focus on Dell’s cash flow durability, ISG margin trajectory, and the timing of a PC recovery. We outline three scenarios below, each grounded in Dell’s official Q3 financials and management commentary.

Bear Case — $118

AI server growth slows; ISG margins stay volatile
PC recovery delayed beyond FY2026
Lower EBITDA and discounted cash flow assumptions

Base Case — $134

AI server demand remains strong; ISG margins stabilize
CSG begins to recover in late 2026
Mid-cycle EBITDA multiple applied

Bull Case — $152

Accelerating AI infrastructure adoption drives ISG margin uplift
Faster AI PC refresh cycle boosts CSG
Higher FCF and premium EBITDA multiple

Probability-Weighted Fair Value

Bear (25%): 118
Base (50%): 134
Bull (25%): 152

Final Fair Value: $135

Valuation scenarios chart for Dell Q3 FY2025 showing Bear ($118), Base ($134), and Bull ($152) price targets in colored vertical bars with a dashed fair-value line at $135.

Verdict

Dell’s Q3 results reaffirmed the company’s position as a cash-generating value story with meaningful AI-driven upside. While PCs remain soft, ISG’s momentum and solid Q4 guidance signal a path toward a more balanced and profitable FY2026. At current levels, Dell appears fairly valued around $135, with favorable risk-reward for long-term investors seeking stable cash flow and measured AI exposure.

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Disclaimer

This article is for informational purposes only and does not constitute financial advice. All analysis is based solely on official company filings, earnings reports, and management commentary. Investors should conduct their own due diligence or consult a financial advisor before making investment decisions.