12:34 PM EDT, 06/12/2024 (MT Newswires) -- Oracle's (ORCL) solid growth driven by strong cloud performance, resulting in an increase in quarter-over-quarter remaining performance obligations and backlog in Q4, BofA Securities said in a note.

"Oracle delivered solid Q4 results, with cloud strength driving incremental backlog/RPO of $18 billion, driven by strength in multi year hosting deals," BofA said, adding that total cloud subscription growth of 20% was below guidance, but Oracle Cloud Infrastructure's 43% growth remained solid, though slightly decelerated.

"However, with outsized growth coming from the hardware intensive OCI business, the economics in Oracle's business are likely to come down over time," BofA said.

Oracle plans to double its capital expenditure in 2025, representing 25% of revenue, up from 13% in 2024. Despite reaffirming 2026 targets, concerns persist regarding margin erosion and low research and development investment.

BofA maintained its neutral rating while raising its price target to $155 from $144 to reflect improving topline growth estimates as RPO flows through the model.

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