To The Moon

$Oracle(ORCL)$’s stock just surged over 8% in after-hours trading! 📈 Driven by the AI data center boom, the company crushed Wall Street estimates and delivered its strongest earnings report in 15 years. 🚀

However, this historic win can't hide its massive financial pressures. $Oracle(ORCL)$ currently faces liabilities exceeding $100 billion,⚠️coupled with rumors of 30,000 layoffs for an AI-driven restructuring.

So, is the market being overly optimistic, or is $Oracle(ORCL)$ truly the next AI powerhouse? 🤔 Let’s break down the core financials, the underlying risks, and the valuation outlook. 👇

1. 💵Did AI Just Supercharge Oracle’s Balance Sheet?

• Historic Highs : Total revenue hit $17.2 billion (up 22% YoY). For the first time in a decade, both organic revenue and non-GAAP EPS grew over 20%, with EPS reaching $1.79.

• Record-Breaking Backlog : Driven by AI contracts, Remaining Performance Obligations (RPO) surged an astonishing 325% to a record $553 billion.

• Cloud & Infrastructure Boom ☁️: Fueled by immense demand for computing power, overall cloud revenue jumped 44%, while core cloud infrastructure (IaaS) skyrocketed by 84%.

2. 🏗️Can a $553 Billion Backlog Outweigh Expansion Costs?

$Oracle(ORCL)$ is rapidly transforming into an AI infrastructure powerhouse. It even raised its 2027 revenue guidance to $90 billion, signaling a massive 34% annual growth rate. 🌟

However, this aggressive expansion comes with significant financial risks:

• Massive CapEx & Cash Flow Squeeze : Nine-month capital expenditure hit $39.17 billion (up 3.2x YoY) and is projected to stay at a staggering $50 billion for FY26, which will inevitably pressure short-term free cash flow.

• Heavy Debt & Dilution : Facing a net debt of $104 billion and with share buybacks dropping to essentially zero, shareholders face potential dilution risks as shares outstanding grow

  1-2% annually.

Summary: Yet, these fears might be overblown. Many large AI contracts are backed by customer prepayments and customer-funded GPUs.

With customers footing the upfront bill, financing risks drop significantly, and Oracle expects no need to issue extra debt in 2026. 🛡️

3. 📊Are We Underpricing Oracle’s High-Margin AI Future?

Despite risks, $Oracle(ORCL)$ ’s fundamental profitability remains intact. Looking ahead, its valuation actually looks highly attractive:

• Reasonable EV/EBITDA : Trading at a multiple of 30, it is slightly expensive but well-justified by its massive $553 billion backlog.

• Unwarranted P/E Compression : The current P/E of 27 is expected to drop rapidly to 14 by FY2028. This steep decline seems too pessimistic for a fast-growing AI leader.

• Strong Pricing Power : Analysts falsely assume future margin contraction. In reality, with AI demand heavily exceeding supply, Oracle commands strong pricing power. Even simple Nvidia chip rentals yield 30% to 40% margins.

🗣️ Questions for You

• Does a $553 billion backlog completely justify Oracle's heavy debt load and massive CapEx in your eyes?

• Do you think Wall Street is underestimating Oracle’s pricing power and future margins?

• Given these growth metrics, what is your target price for Oracle?

  Leave your comments and win Tiger Coins👇

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