Read across from Oracle - SaaS is NOT toast ?

Oracle has been a battle ground stock. The stock halved due to concerns about its balance sheet + very aggressive capX plan to support OpenAI. Remember Oracle is much smaller business than the likes of Google, Microsoft, Amazon, and Meta. Does it have the scale to compete in AI infrastructure with the hyperscalers ?

Guess time will tell. In the meantime, some read across from its latest result... SaaS is far from dead at present. In Q2, its cloud application business grew 10% yoy.

Also the quote below is worth a read... While Oracle has to defend its SaaS business, note how AI has another use case to help the SaaS vendors. Implementation will be much quicker with AI than not.

" The introduction of AI is an accelerator, not a replacement for packaged applications. As such, our decades of experience and expertise running business processes across every industry in every geography for organizations of any size gives us the understanding of how to help them succeed.

Before AI came along, application suites had already proven their effectiveness. Companies have been able to increase their profit margins because end-to-end automation of standardized and efficient business processes proved to be much more effective than one-
off custom solutions. But that did require organizations to follow workflows and processes as designed in the system, something that many struggle to achieve consistently across functions, teams and regions. AI changes this dynamic. Rather than asking every employee to navigate and execute a process exactly as a system expects, AI agents can perform tasks using the organization's established workflows and business rules. Employees then shift to overseeing agents, resolving exceptions and applying human judgment where it matters most.

By combining applied AI with decades of sophisticated business rules, regulatory compliance, security models, data models and customer configurations, we enable customers to continuously realize AI's value while keeping their data secure and their operational
guardrails intact. This allows organizations to harness the power of our application suites more easily than ever before.We are incredibly confident in the potential for this new paradigm to deliver much more rapid ROI for our customers.

At AI World in October, we will unveil a new agentic AI accelerator poised to redefine how customers deploy Oracle applications faster, simpler and at a dramatically lower cost. Working alongside Oracle and customer teams,AI agents will automate and orchestrate implementation at an unprecedented scale, compressing SaaS deployments from years to months and months to weeks. It's really the power of these things together that reinforce my belief that the growth of our applications business is only going up from here."

Also note how Oracle talked about the value/longevity of its older GPUs... Renewing at higher price than before:

" GPU longevity and value continue to impress. Of all the GPUs that came up for renewal in Q1, that capacity was renewed or resold at a 20% premium to prior contracts. The majority of those GPUs are 4 years or older. We see a long useful life with increasing value for the AI capacity we're deploying."

So far so good.... Per Oracle, demand > supply for GPU still.... I will stick to the base case that AI capX will be up in 2027. On balance, OK for the likes of Hynix and even Bitdeer. Also for now, feels like talk of SaaS-pocalypse is pre-mature.