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Here’s my take on WHY you need to leverage Oracle’s free Cloud certs, especially now that OpenAI is set to pay Oracle $30B every YEAR for cloud and data center services… Start studying for your Oracle Certs now!

179,135 Aufrufe • vor 11 Monaten •via X (Twitter)

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OpenAI just got OFFICIALLY flagged as a company that might not be able to pay its bills. S&P Global Ratings just cut Oracle's long term credit rating from BBB to BBB-. One more cut and Oracle becomes a JUNK rated company for the first time in its history. But the reason S&P gave is what's really interesting here... They named OpenAI as a "key credit risk" inside the report. OpenAI is a private company. It carries no credit rating and has never been profitable. And a ratings agency just took the risk of that company failing and wrote it directly onto the credit file of a public company held inside pension funds and bond funds all over the world. OpenAI accounts for roughly HALF of Oracle's remaining performance obligations. That's the famous $638 billion backlog every bull points to as the reason to own the stock. Half of the asset is the risk. And then there's the maturity trap: Oracle's data center leases run 15 to 19 years. Its cloud customer contracts run about 5 years. Oracle disclosed both figures in its own annual report. So Oracle is signing 19 year obligations to serve 5 year promises made by a customer that has never earned a dollar of profit. If OpenAI cannot pay, Oracle gets left holding data center leases it may not be able to exit, and may have to re-lease to somebody else on worse terms. That is the entire downgrade in one sentence. The numbers underneath: Oracle spent roughly $55.7 billion on capital projects in fiscal 2026 and posted negative $23.7 billion in free cash flow. S&P now expects the fiscal 2027 cash flow deficit to widen to around negative $42 billion. That is nearly DOUBLE its previous estimate, and the agency admitted it had underestimated how much Oracle would need to spend. Oracle plans to raise up to $40 billion in fiscal 2027, including a potential $20 billion share sale that would add roughly 4.8% to its share count. They literally cannot borrow more without triggering the next downgrade, so shareholders are being diluted to protect the bondholders. And the funny part is that on the day of the downgrade, Oracle's stock went UP 2.65%. But on that same day, the spread on Oracle's BONDS widened. Equity investors looked at the $638 billion backlog and bought. Credit investors looked at the identical company and demanded to be paid more for the risk of holding it. Credit investors are the ones whose entire job is to price what goes wrong, so they just repriced Oracle. For context, Microsoft is rated AAA, Alphabet is AA+, and Amazon is AA. Oracle is chasing the same AI contracts from seven to nine notches further down the ladder. The day after the downgrade, the UK named Oracle, alongside three other cloud providers, a critical third party to the British financial system. Supervision by the Bank of England begins July 13. Oracle is the only one of those four sitting one notch above junk. Now follow the chain: OpenAI has never made a profit. OpenAI is half of Oracle's backlog. Oracle is one downgrade from junk. Oracle is now formally load bearing infrastructure for British banks. The business risk of an unprofitable private startup has traveled through a corporate balance sheet and landed inside the supervisory perimeter of a central bank. Nobody designed that. It happened one contract at a time. And the demand IS real. Oracle's cloud infrastructure revenue grew 93% last quarter. If this buildout works, it becomes one of the great corporate reinventions in history. But the whole structure now rests on one question that no rating agency, no bank and no regulator can answer: Can OpenAI pay its bills?

Ricardo

298,061 Aufrufe • vor 5 Tagen

Larry Ellison borrowed $125 billion to bet everything on a single customer that LOSES $5 billion a year. American banks are already refusing to lend him another dollar. And now that single customer has started to slowly walk away. This is one of the biggest gambles in tech history - and it’s NOT looking good: Oracle has $124.7 billion in debt on its books right now. That's more than the GDP of 100+ countries. Their free cash flow over the last 12 months? Negative $13.18 billion. They are spending more money than they make. And they're doing it on PURPOSE. Every other hyperscaler funds their AI buildout with cash. Google has cash. Amazon has cash. Microsoft has cash. Oracle has IOUs. They raised $58 billion in debt in just two months. $38 billion for Texas and Wisconsin data centers. $20 billion for New Mexico. And they need another $100 billion on top of that. Even US banks are starting to say no. TD Cowen reported that multiple banks have pulled back from Oracle lending. Borrowing costs have roughly DOUBLED since September. They're now paying interest rates typically reserved for companies rated below investment grade. Barclays downgraded their debt to underweight and warned Oracle could run out of cash by November 2026. So what does Larry Ellison do? He FIRES 30,000 people. Oracle is planning layoffs affecting up to 18% of its entire workforce. The goal is to free up $8 to $10 billion in cash flow just to keep the lights on while they build data centers for ONE customer: OpenAI. Oracle's $553 billion backlog sounds incredible until you realize a massive chunk of it flows through a single relationship. If OpenAI sneezes, Oracle catches pneumonia. And OpenAI is already sneezing... Sam Altman DROPPED plans to expand the Stargate site in Abilene, Texas. And the reason is insane: Nvidia's chips are improving so fast that by the time Oracle finishes building the data center, the processors inside it will already be outdated. Oracle is building with Blackwell chips. But Nvidia's new Vera Rubin platform delivers 5x the inference performance at 10x lower cost per token. So Oracle is borrowing billions to build facilities that will house yesterday's technology before they even open. The world of bits moves faster than the world of atoms. And Oracle is trapped in between. But here's where it gets wild: The earnings call revealed something most people missed... Oracle now REQUIRES certain customers to buy their own GPUs upfront and hand them over. They call it the "bring your own chips" model. Translation: Oracle can't afford the hardware anymore. So they're asking customers to fund the construction of Oracle's OWN data centers. The stock is still down 23% this year even after the 12% earnings pop. Moody's rates Oracle just two notches above junk status. Lower than Amazon, Alphabet, Meta, and Microsoft. And they have $248 billion in ADDITIONAL lease obligations that aren't even on the balance sheet yet. Larry Ellison is 81 years old and making the biggest bet in corporate history. He's trying to turn a legacy database company into a hyperscale AI cloud provider using other people's money. All while his only major customer is a startup that burns $5 billion a year and just had its expansion partner refuse to fund the next campus. The earnings beat was real. Revenue up 22%. Cloud infrastructure up 84%. But revenue growth funded by debt isn't growth. It's leverage. And leverage works both ways. If OpenAI stays loyal, if the Stargate buildout continues, if the debt markets keep lending, if Vera Rubin doesn't make their entire infrastructure obsolete overnight, then Larry Ellison pulled off the greatest corporate reinvention in history. But that's a lot of ifs for a company two notches above junk. Oracle is either the most undervalued AI play on the market or the most overleveraged house of cards since 2008. The next six months will tell us which one.

Ricardo

181,176 Aufrufe • vor 4 Monaten