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Oracle, the weaker performer, is likely to see the risks of building data centers priced into its stock in the coming months. Per @KobeissiLetter, Oracle fell 5% after declaring force majeure on a massive New Mexico data center, reportedly to shield itself from rapidly rising project costs. x.comÂ
Oracle is spending money to defend its business and is best avoided entirely. Its identity has become unclear: of a $638 billion backlog, $300 billion comes from OpenAI and $263 billion from hyperscalers, which raises the question of whether it is now a data-center infrastructure company and what the value is. x.comÂ
Oracle's declaration of force majeure on a huge data center under construction in New Mexico signals trouble with the project's rising expenses. Oracle is questioning the project's growing costs, and the stock fell more than 5% on the news. x.comÂ
Oracle looks like the Lehman of the hyperscalers in a subprime-style debt bust around the AI data-center build-out funded by private credit, private equity and bank lending. Per HedgieMarkets, Oracle sent a force majeure notice on Project Jupiter, its New Mexico data center for OpenAI's Stargate, after the state twice denied permits for a gas pipeline the site needs. Oracle wants the right to delay payments if it misses its 2028 opening, and $18 billion of project loans trade at 89 to 91 cents. … Show more
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
AI semiconductor equipment stocks are likely heading for a sizeable air pocket as data-center delays become far more common. Many underestimate the current delays and freeze in Texas, which are likely to leave lots of idle components sitting in the supply chain. x.comÂ
Oracle's year-long evaluation of Cerebras' costs, performance, customer uses and equipment life strengthens the case for its inference technology. Oracle chose to bring the equipment into its data centers; that real-world buyer decision conflicts with the short seller report's criticism. 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
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
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 is worth accumulating because demand for its products keeps growing, as its backlog shows, and the AI revolution has years left. Its services are used by a large share of Fortune 500 companies, and betting against Larry Ellison is unwise. The situation is messy: Ellison pledged 36% of his Oracle holdings, $9.2B, as loan collateral, Oracle invoked force majeure on its own data center while insisting it is on schedule, and the stock can still fall further. x.com x.comÂ
Oracle's reliance on OpenAI makes its backlog vulnerable. About $250B of backlog comes from OpenAI, which is not making money; that risk is no longer in Oracle's hands, and the stock is very likely to fall further. x.com x.comÂ
