Wey How
Thematic Position Trader, Technology Stocks & Trend Following
Oracle is now a critical AI infrastructure provider as well as a legacy software company, making it a more balanced cloud company. Upcoming earnings will show AI demand and how its backlog, one of its greatest strengths and also a risk, converts. The selling induced by Leopold Aschenbrenner's short and the $5 billion convertible looks done, with the price reclaiming $200 and its 200-day average, so the narrative should flip from negative to positive. 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 will not be allowed to fail if the US government is all in on AI supremacy; it may dip, but not fail. Widening credit default swap spreads, now at 230 bps, and a high debt-to-equity ratio can weigh on the stock, but one quarter of major revenue outperformance would turn the tide. x.com x.comÂ
Oracle's OpenAI exposure makes buying its shares here a bet too big to take. x.com x.comÂ
Oracle will likely either tank or skyrocket with OpenAI's IPO, and skyrocketing looks more likely. Oracle should be one of the most important companies for enterprise AI adoption, which is OpenAI's real focus rather than $20-a-month subscriptions. It also offers compute exposure. x.comÂ
Oracle could eventually trade like Micron and SanDisk do today once the market fully appreciates its role in AI infrastructure, a contrarian setup with more upside left than CoreWeave or Nebius. Timing is unclear, and the shift depends largely on OpenAI sentiment: skepticism is still priced in, but if it becomes clear OpenAI is not going anywhere, the narrative could change quickly. David Sacks and Chamath Palihapitiya were surprisingly bullish on Oracle in a recent podcast. x.comÂ
Oracle's big rally on its RPO jump was fake, and the only data since show OpenAI writing checks its business can't cash. The pop came on an earnings miss and took 57 days to undo; the stock then fell another 46% and has dropped after every report since. Within two weeks, a force majeure dismissed as a nothing burger gave way to word that its cash-incinerating key customer has $20B less revenue than due diligence assumed. Shorting in size is still hard. x.com x.com x.comÂ
Oracle is a buy here if it gets paid. A drop of more than 60% from a 52-week high has happened only once before, and passing on this level looks like a mistake that will be obvious in four years. x.comÂ
Oracle could rally through year-end if GPT-6 Astra flips the narrative that OpenAI will bankrupt it. Investors hated it at $115 and will love it at $200, the same story as ServiceNow in the $80s and Microsoft in the $350s. 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
Oracle looks mispriced because $11 of current consolidated earnings power puts it at 11x earnings without a breakup. It trades below its software business's value despite the highest gross retention in software; separating pre-AI OCI, AI operations and AI development makes it an obvious long. Future funding will cost more, but current leverage is no issue and all contracts are well below spot, leaving nowhere near neocloud risk. Fundamentals may not matter during panics. x.com x.com x.comÂ