Oracle Turns the Tables on Its Short Sellers With Earnings Blowout
$Oracle(ORCL)$
Short volume counts the shares sold short in a single session. A short sale is a wager that a stock will fall, so when that count climbs and the share price rises, the sellers face potential losses and may be forced to buy back — the classic squeeze.
Oracle reported fiscal first-quarter revenue of $19.35 billion after the market closed on Thursday, beating the $19.13 billion analysts expected. Cloud infrastructure sales surged to $7.4 billion in the three months ended Aug. 31, surpassing estimates by 2.8%. The backlog — contracted revenue not yet recognized — reached $664 billion, above the $641.8 billion analysts expected.
Thursday's drop was not an Oracle story alone. Stocks fell for a third straight session as Brent crude topped $101 a barrel and the 10-year Treasury yield hit about 4.96%.
OpenAI's new Astra model, released last week, reignited fears that artificial intelligence could displace traditional software, pressuring Salesforce and ServiceNow, according to an article published by Reuters on September 8. Oracle sits on the other side of that divide, since much of its growth rides on a $300 billion computing contract with OpenAI.
Beyond single-day volume, short interest measures the total shares currently held short. That figure has climbed from about 0.94% of the float — the shares available for public trading — at the end of 2025 this year to roughly 1.6%, according to data tracked.
The steady build shows persistent skepticism, though the level remains too low for a historic squeeze. It is, however, high enough to add fuel when a genuine beat lands.
The bear case has not vanished. Oracle plans $90 billion to $95 billion in capital spending this year, and S&P Global cut its credit rating in July over weak cash flow. There are also reported delays in its Stargate data-center project, and much of the backlog is concentrated with a few large AI customers, according to Reuters. Those risks explain why the shorts kept building all year.
Some are also locking in gains as the stock opened 7.5% higher. Money flow tracks whether cash is entering or leaving a stock. In the first 30 minutes of trading Friday it showed a net outflow of $69.72 million, according to data tracked by moomoo. Every bucket was a net seller. In plain terms, retail and institutional investors were stepping back, paring the stock's gains to 2.4% by 10 a.m.
The profit ratio — the share of holders sitting on gains — stood at 69.7%, according to exchange data tracked. With most owners in the green, there is less pressure to sell in a panic. Average cost sits at $152.40, with support at $139.60 and resistance at $182. Resistance marks a level where past buyers tend to sell, so the rally now faces supply from holders trapped near $202.20, the high end of the range where 90% of the holders bought in.
After the results, Oracle now trades at 24.35 times trailing earnings, in the 10th percentile of its own five-year history, according to data tracked by moomoo. A low percentile means the stock is cheaper than it has been most of the time.
The forward multiple of 20.42 sits well below the industry average of 31.85. That gap suggests the selloff reflected fear rather than broken fundamentals.
The mix shift is the real story. Cloud infrastructure is expected to account for about 63% of revenue in its fiscal year ending in May, up from about half in the previous year, according to estimates compiled by Bloomberg.
Software sales actually fell 3% to $5.55 billion, as customers continued to migrate from on-premises software to the Cloud. Oracle is becoming a cloud company that happens to sell software.
"You can see that strong inflection point in our RPO converting into revenues and operating profits,” CFO Hilary Maxson told analysts during the company's earnings call Thursday night, referring to the company's remaining performance obligations, which represents the backlog. “We now expect around half of our RPO to convert into sales over the next 36 months.”
The key question is whether the $664 billion backlog converts into revenue on schedule. Friday's inflation report and next week's Federal Reserve meeting could also swing the shares, with the CME FedWatch tool showing traders pricing an 85.6% chance of a rate hike, while prediction markets has the odds at 81%.
@TigerStars @CaptainTiger @TigerWire @Daily_Discussion @Tiger_chat @Tiger_comments @MillionaireTiger
Comments