CK Capital
Defense/Space/Tech/Photonics Investor, Co-Owner of CV Research
Oracle's debt fear has created a solid opportunity, because new AI contracts are being funded largely without Oracle's own cash. Over $30 billion of Q1 contracts required no additional Oracle cash through prepayments, bring-your-own hardware and supplier financing; net cash capex was $18 billion versus $28 billion reported, and operating cash flow hit a record $23 billion. GPUs mostly four years or older renewed at a 20% premium, and its largest customer is getting cheaper to run. x.comÂ
Oracle beat on every line and raised guidance above its own range, with AI demand still growing faster than supply. RPO reached $664B, up $209B in a year, with more than $30B of new AI cloud contracts this quarter; cloud infrastructure revenue grew 121%, and over 300,000 GPUs were delivered since Q4. Q2 revenue growth is guided to 30-34%. The cost is dilution, with a $20B ATM done and more coming within about $40B of planned raises, and free cash flow was -$5B as capex funds the buildout. x.comÂ
Oracle's plan to fund its AI buildout from cash flow makes last week's financing fears look completely overdone. It expects capex to peak in FY27-28, free cash flow to turn positive in H2 FY28 and top $30B in FY29, funding growth from then. Oracle plans at most $20B in further capital raises through FY30, excluding refinancing, after an already completed $20B equity raise. Vendor financing, customer prepayments and customer-supplied hardware should reduce upfront cash needs. x.com x.comÂ
Oracle's AI buildout looks fundable as spending peaks and cash flow turns positive. Spending is forecast to peak in FY27-28, with free cash flow positive in 2H FY28 and above $30bn in FY29, a roughly $54bn swing. New capital raising is capped at $20bn through 2030, half equity and half debt. Revenue is projected to grow from $90bn next year to $225bn+ by FY30. Bullish Oracle. x.comÂ
Oracle looks set to burn many more billions in cash at least into the first half of fiscal 2028. That is the less reassuring implication of Reuters' headline that Oracle expects cash flow to turn positive in the second half of that fiscal year, even though the market liked the news. x.comÂ
Oracle's free-cash-flow forecast suggests today's capital intensity may have an expiration date. Oracle now expects free cash flow to turn positive in the second half of FY28 and reach at least $30 billion in FY29, a possible easing of the financing risk in its AI-compute buildout. x.com x.comÂ
Oracle's projected free-cash-flow turnaround challenges the market's fear that data-center spending will bring insolvency or years of cash burn for little return. Oracle expects positive FCF in the second half of FY28, at least $30B in FY29 and self-funded growth by FY29 as capex declines. Already undervalued, Oracle is seeing a lift; the clearer profitability path could lift other data-center operators too. x.comÂ
The debt behind Oracle's capex is drawing credit-market concern. Its five-year credit-default swap spread has risen past 300 basis points. x.comÂ
Oracle's non-AI revenue and scale could help it outlast debt-starved neoclouds. Elon Musk says debt markets have largely shut out firms lacking substantial non-AI revenue. Oracle raised $20B through an ATM without significant dilution; unlike other major hyperscalers, it is not building Nvidia alternatives, giving Nvidia reason to prioritize it. If Musk is right, consolidation could lift Oracle's pricing power; at 19x earnings, it is without a doubt one of AI infrastructure's best buys. x.comÂ
Oracle's forecast turn to positive free cash flow strengthens its funding outlook. Oracle expects free cash flow to turn positive in the second half of fiscal 2028 and reach at least $30 billion in fiscal 2029 once capex peaks; it caps new capital raises through fiscal 2030 at $20 billion. The multi-model signal turned Long on Tuesday, with three of four models agreeing. x.comÂ
Oracle's debt has surged from $44B in FY16 to $156B in 2026, largely because of heavy spending on AI infrastructure and cloud capacity. x.comÂ
Leasing data centers reduces Oracle's capital intensity and gets GPUs online faster, shortening the path to self-funding growth. Its FY29 free-cash-flow guide is $30B+, and Oracle and CoreWeave each have at least 1.5GW live while the next-largest neoclouds have only a few hundred MW at most despite claiming self-building can scale faster. Oracle's financial risks are declining: leverage is down about 0.75x from its peak earlier this year. x.com x.comÂ
