I don’t think AI is going away.
intercst
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Just be careful here… looks like bulk of the revenue projection is coming from OpenAI deal… $MSFT had foregone this deal? Why because the economics of the deal are not good? or Because $MSFT cannot get GPU’s. I would assume the economics of the deal are not great.
For $ORCL this is a big bang moment, but as the details emerge, some of these gains may be given back.
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Economic cycle is very different from a single stock price movements. Most bulls would argue, that Oracle price movement tells you, that $AI is not yet fully priced.
So far, no one has come out and said they are cutting down their AI cap-ex, wait for at least the first domino to fall.
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I ran some quick back-of-the-envelope numbers. The scale of data centers $ORCL would need to build is enormous. Even if we assume they’re expanding existing facilities (and Oracle’s data centers don’t have the same expansion flexibility as AWS), this still requires massive capex, significant time, and specialized expertise. Oracle hasn’t yet mastered region rollouts the way AWS has. AWS, Azure have better scale of economics, and supply chain muscle.
In cloud, every dollar of revenue comes only after multiples of that in upfront investment. Given this deal is largely infrastructure-driven, you’re realistically looking at 3–5x capex before revenue materializes.
Today’s stock move feels excessive. It’s a strong, momentum-driven reaction that’s likely to have follow-through, so it’s not worth shorting immediately. But at some point, I may look to short directly or buy puts.
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