Oracle (ORCL) shares face pressure because the company has borrowed more than $125 billion to build AI cloud infrastructure, and nearly half of its $664 billion backlog comes from a $300 billion deal with OpenAI, whose ability to honor it is questioned. The article argues the backlog remains large without OpenAI, growing by $209 billion over the past 12 months. Fiscal Q1 2027 revenue (ended Aug. 31) topped $19 billion, up 30% and mostly from cloud, and net income rose 63% to almost $4.8 billion despite rapidly rising interest expenses. Non-cloud segments could stabilize the company in a downturn, and its P/E has fallen to about 20, versus a five-year average of 35. The article also notes that the backlog does not guarantee future revenue and that debt significantly strains the company's finances.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
Oraclecloud computingartificial intelligenceearnings
Open a keyword to see other news on the same topic.
Related tickers and likely impact
NVDA
• NeutralNvidia
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Semiconductors |
| Market cap | $5.2T |
| Close on 10/16/2026 | 214.14 |
| Change that session | -1.42% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Prediction: Oracle’s Next Chapter Could Be Huge for Shareholders
24/7 Wall St. sets a 12-month price target of $200.70 for Oracle, about 50.6% above the $133.28 midday price, with a buy rating. The stock is down 30.71% year to date and well below its 52-week high of $318.28, even as cloud infrastructure revenue more than doubled last quarter. Oracle's Q1 capex reached $28.5 billion, pushing free cash flow to -$5.40 billion, with full-year capex guided at $90 billion to $95 billion and plans to raise about $40 billion in debt and equity this fiscal year. Operating cash flow rose 184% to $23.10 billion, while interest expense climbed 55% to $1.4 billion. The bull scenario reaches $322.31 and the bear scenario $171.29, with the article citing rising borrowing costs and delayed datacenter deliveries as key risks.
- Alphabet Looks Better By The Day for This One AI Strategy
The author argues Alphabet stands apart because it owns the full AI stack, from Gemini models and TPU chips to Google Cloud, Search and YouTube. Google Cloud revenue reached $24.77B, up 82% year over year, with backlog above $460 billion, while Search and related revenue rose 17% to $63.27B. Operating income climbed 30.4% to $40.77B, and the Gemini app reached 950 million monthly active users. The piece also flags risks: 2026 capex guidance of $175B-$185B, Q2 free cash flow of -$5.86B, borrowings up from $46.5B to $98.2B, suspended buybacks and a $49.6B equity raise that dilutes shareholders. The author still holds the stock, believing Alphabet owns more of the AI stack than other companies they follow.
- Prediction: Microsoft Stock Is Going to Soar After Oct. 28
The article argues that recent market volatility stems from doubts about the sustainability of AI infrastructure spending, making Microsoft's upcoming earnings report critical. Microsoft reports fiscal 2027 first-quarter results on Oct. 28, focusing on Azure and Copilot; Copilot 365 licenses reached 30 million as of June 30, up 50% from three months earlier, yet remain small against more than 400 million 365 licenses. Azure carries $678 billion in remaining performance obligations (RPO), and its revenue growth accelerated to 43% in the final quarter of fiscal 2026. The author cites a forward P/E of 27.3 as evidence of attractive valuation, but warns that OpenAI has committed over $300 billion to Azure without currently having that money. The author suggests investors may manage risk by keeping a small position size.
- Credit stress is threatening to unwind the AI bull. All eyes are on Oracle to hold the line
Oracle's bonds are sitting close to junk territory as markets cool on AI after CoreWeave's slump, and a credit downgrade could have cascading effects across AI financing. Its five-year credit default swap spread stood at 295 basis points, up 287% in one year, a level more in line with high-yield credits, while S&P rates Oracle BBB-, the lowest investment-grade level. The company has issued $118 billion in long-term debt to fund its buildout, and analysts estimate free cash flow of -$23.7 billion this year and -$36 billion in 2027. Deutsche Bank warns that a junk downgrade could force IG-only investors into sales, though Vanguard's Brad Collins says he would not extrapolate high-yield stress to investment grade.
- Nvidia wins CPU business from Modal, previously exclusive to AMD and Intel
Modal, a San Francisco-based AI cloud startup that previously ran its AI agent workloads only on Intel and AMD processors, will begin using Nvidia's new Vera CPU. Early tests showed the Nvidia chip doubled work capacity for AI agents, and Modal plans to run it alongside Intel and AMD chips, assigning each task to the most efficient hardware, though integration requires substantial software changes. Modal recently raised $750 million in a round led by Accel at a $15.75 billion valuation and expects $1 billion in sales over the next year, with usage tripled and revenue up more than 15 times year-over-year. Nvidia projects at least $20 billion in Vera chip revenue this fiscal year in a market it estimates at about $200 billion, and says OpenAI, Anthropic, Oracle and Perplexity also plan to use the chips.
- Search Resilience and Cloud Growth Powers Alphabet’s (GOOGL) Resilience
Diamond Hill's Large Cap Strategy returned 3.18% net of fees in Q3 2026, outperforming the Russell 1000 Value Index's 2.61%. In its Q3 2026 investor letter, the fund said it had initiated a position in Alphabet (GOOGL), believing AI is strengthening its core search and advertising business and that Google Cloud has become a leading AI-infrastructure platform with attractive, profitable revenue growth. Alphabet closed at $340.59 on October 16, 2026, with a $4.15 trillion market capitalization, up 8.81% year to date and trading in a 52-week range of $244.15 to $408.61. At the end of Q2, 275 hedge fund portfolios held the stock, up from 265 in the prior quarter.
Related markets
Latest news
- Why Meta's Q3 earnings could be a little hard to interpret
Meta is reporting its third-quarter earnings after the market closes Wednesday, and Yahoo Finance's Brian Sozzi says the report will be hard to interpret. Recent good news on Meta's AI products, including new models and an AI agent, may not appear directly in the results but will likely be discussed on the earnings call. The key uncertainty is how investors will react if Meta raises its capex outlook again: it could be seen as fueling those products, or as overspending on offerings not yet reflected in financials. Sozzi expects the market to give Meta the benefit of the doubt on higher capex, as long as the increase does not shock investors.
- Zerohash rolls out a new tool to move crypto without copying wallet addresses
Zerohash launched AUTH, a service that lets users move crypto, stablecoins and blockchain-based stock tokens between linked exchange accounts or self-custody wallets without copying wallet addresses or choosing a blockchain network. To transfer, users pick an account in an app that offers AUTH, sign in and approve the move, while the service handles routing and settlement and each app sets which assets and transfer types it allows. AUTH supports more than 600 connections, including Coinbase, Robinhood, Gemini, MetaMask and Phantom, with Coinbase, Robinhood and Gemini live and Kraken in beta. The launch comes as Zerohash's application for a national trust bank charter, returned by the Office of the Comptroller of the Currency in July, remains pending after a narrower refiling on Aug. 18.
- 2 charts show why Wall Street is right to worry about tech stocks
Rising cost of capital could affect the financial statements of hyperscalers such as Oracle (ORCL) and Google (GOOG, GOOGL) in 2027, as they need fresh debt to fund AI infrastructure and free cash flow may turn negative. JPMorgan strategist Mislav Matejka forecasts hyperscaler free cash flow will turn negative in 2027, implying credit markets will drive more of the AI build-out. Consensus estimates for 2027 capital expenditures are already rising from levels experts believe are too low. Morgan Stanley sees total 2027 capex among hyperscalers reaching $1.6 trillion, up from $978 billion estimated for this year. Dan Ives of Yorkville expects capex to reach the trillions and over 1,000 datacenters to be built in the next few years.
- Update on loan rate cuts as of the evening of Oct 19: MB, VietinBank, SHB, OCB join in
SHB, MB, VietinBank and OCB have announced loan rate cuts, following Agribank, Vietcombank, BIDV, ACB, LPBank and VietBank, with typical reductions of 1.5-2% per year. MB is cutting 1.5% per year for five priority sectors, to rates from 7.9% per year, and up to 2% in some cases; VietinBank is cutting up to 2% per year, while OCB offers up to 2.25% per year on some medium- and long-term loans for OCB Priority Banking members. SHB is cutting 1.5-2% per year for businesses and households and offers rates from 5.5% per year for lecturers and students at some universities. Vietcombank commits to cutting at least 2% through year-end, BIDV applies rates from 6% per year on short-term VND loans from 15/10/2026, and VietBank runs a VND 3,000 billion package. Specific benefits depend on borrower type, loan purpose, term and program conditions, following directives from the Government and the State Bank of Vietnam.
- America's EV Plans Have Died
Billions of dollars went into EV factories, dealerships and marketing after President Biden set a goal for 50% of new US car sales to be zero-emission by 2030, but EV sales have since fallen sharply. US EV sales dropped 30.7% in the first nine months of 2026, after the $7,500 tax credit expired on September 30 last year, and gas prices near $4.50 per gallon have done little to lift them. According to Kelley Blue Book, the average transaction price of a new EV was $54,754 in August, above the $50,089 average for all new cars. Ford's EV sales fell 80.2% to 6,047 in the third quarter, and it has no new EV planned until its Fathom launches next year, while Tesla holds over 50% of the market and no other major automaker has even 10%. The article says EVs could recover if gas prices reach $5 and stay there for months, but that is uncertain.
- Nebius is Your New AI Sentiment Gauge For AI Debt and GPU Risks
Nebius (NBIS) fell 25.15% in one week to $165.47 as neocloud stocks sold off after a Gartner forecast that over 80% of neocloud providers will stop operating independently by 2030. The article highlights strong results: second-quarter revenue rose 454% to $582.3 million, above the $574.65 million consensus, and remaining performance obligations reached $37.5 billion. Against that, Nebius guides to $20 billion to $25 billion of 2026 capex on $3 billion to $3.4 billion of revenue, carries about $10.0 billion of convertible principal, and its quarterly interest expense rose to $119.1 million from $4.8 million. The article rates Nebius a Hold and says the stock now moves with AI credit conditions, with the verdict tied to upcoming reports and financing choices.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.