원문 보기
13 months ago, Oracle stock jumped 36% in a single day. Larry Ellison briefly became the richest person on Earth. Today, the stock is down 59% from that peak, and it's Michael Burry's biggest short. Wall Street's average price target is $238. Friday's close was 141. Burry is betting on a collapse. Palantir trades at more than 100 times earnings.
Oracle trades at about 17. So, why is the cheap one Burry's biggest target? One word, debt. Let's break down Oracle. What it does, how it got here, . Oracle is really two businesses glued together. The old one is database software and business applications. Banks, airlines, hospitals, and governments run on Oracle databases.
It's mature, very profitable, and barely growing. Software revenue fell 3% last quarter. The new one is Oracle Cloud Infrastructure, or OCI. Oracle builds giant data centers full of AI chips, and rents that computing power to companies like OpenAI. That business grew 121% last quarter. The plan, use the cash from the old business, plus a mountain of borrowed money, to build the new one.
Everything in this video comes back to that trade-off. Oracle was founded in 1977 by Larry Ellison, Bob Miner, and Ed Oats. One of their first projects was a database for the CIA, code-named Oracle. The name stuck. It went public in March 1986, one day before Microsoft. It became the king of databases, then bought its way into everything else.
PeopleSoft, Sun Microsystems, NetSuite, and in 2022, Cerner for billion, but it was late to the cloud. In 2008, Ellison called cloud computing gibberish. Its own cloud only really took off with the AI boom. For years, the stock was boring. From 2020 through 2023, it went from about $50 to about 100.
Then AI arrived. In 2024, the stock rose 58%. In January 2025, Oracle joined OpenAI and SoftBank in Stargate, a $500 billion data center project. In September 2025, Oracle reported a backlog of $455 billion. The next day, the stock jumped 36%, its best day since 1992. The same day, reports said much of that backlog came from a $300 billion deal with OpenAI.
Then the doubts set in. In December, a bigger spending plan spooked investors, and the stock fell about 11% in a day. In January, Burry revealed his puts. May brought a 40% rally as fears about OpenAI eased. Then June wiped it out. Oracle laid out plans to raise another $40 billion, and the stock fell 35% that month.
In July, S&P cut Oracle's credit rating to one notch above junk. On July 28th, the stock hit 114.50, down 67% from the peak. On Friday, it closed 141.40. Now, the latest quarter, reported September 10th, revenue $19.3 billion, up 30%. Cloud infrastructure, $7.4 billion, up 121%. Adjusted earnings per share, $1.92 up 30% and ahead of estimates.
And the backlog, called remaining performance obligations, hit $664 billion. But now look at the cash. Oracle spent 28 and 1/2 billion dollars on data centers and equipment in one quarter. Over the past year, it spent 76 billion. That's more than its entire revenue of 72 billion. Free cash flow over the past year, negative $29 billion.
The business is profitable on paper and burning cash in reality. So, the bull case, five points. One, the backlog, $664 billion of signed contracts. That's more than 7 years of this year's revenue. And Oracle added more than $30 billion of new AI contracts last quarter alone. Two, growth. Cloud infrastructure revenue more than doubled.
Oracle's long-term plan calls for $225 billion of revenue by fiscal 2030 and $21 of earnings per share. Three, it's cheap, at least on earnings. Oracle trades at about 17 times next year's earnings. If it hits that 2030 target, today's price is less than seven times those earnings. Four, Wall Street is still bullish.
43 analysts cover it. And their average target is $238. That's 68% above Friday's close. Five, the founder isn't selling. Larry Ellison owns close to 40% of the company. And in September, he canceled a plan that could have sold 7 and 1/2 billion dollars of his stock. The bull view in one line, Oracle is building the AI cloud with the contracts already signed.
And the stock is priced like nobody believes it. Now the bear case, and this is where Burry comes in. One, the cash burn. Oracle spent more on capital over the past year than it brought in as revenue. It expects 90 to 95 billion dollars of capital spending this fiscal year. S&P expects a cash shortfall of about 42 billion dollars.
Two, debt and dilution. Borrowings jumped 40% last fiscal year to about 130 billion dollars. Oracle also sold 20 billion dollars of new stock last quarter, and its credit rating is now BBB minus, one step above junk. Three, OpenAI. About half of that backlog reportedly comes from one customer, and that customer is still losing billions.
In April, The Wall Street Journal reported that OpenAI's own finance chief had worried about paying for future computing contracts. And Oracle expects only about 12% of the backlog to become revenue in the next 12 months. Four, Michael Burry. As of September, Oracle was his largest short. In January, he said Oracle didn't need to do what it's doing and added, "Maybe ego." He took profits on his puts this summer, shorted the stock again at 144.63 in August, and in late September switched to puts expiring December 2027.
He also argues that AI chips wear out faster than companies assume, so profits look better than they are. Five, the old business is shrinking. Software license revenue fell 15% last quarter, and the new cloud business is capital heavy with thinner margins than software. The bear view in one line: Oracle turned a cash machine into a leveraged bet on one customer.
So what decides who's right? Start with the next earnings report expected in mid-December. Oracle guided to revenue growth of 30% to 34% and cloud growth of 65% to 71%, but the real test is cash, capital spending, free cash flow, and how much more debt or stock it needs. Watch OpenAI. A successful stock market debut would ease the biggest worry.
A stumble would hit Oracle hard. And watch the credit rating. One more cut and Oracle's debt is junk. On the chart, the July low at 114.50 is the line the bears are aiming at. The average analyst target is 238. For options traders, Oracle moves hard on news. Up 36% in a day last September. Down about 11% after the December report.
Down about 12% the day after the June report. That makes the option premium rich. But if you sell puts here, make sure you'd be happy owning a company with a $130 billion of debt. Defined risk spreads cap the damage if the next report goes wrong. And look at Burry's structure. Puts expiring December 2027 struck well below today's price.
Cheap per contract, but they only pay off big if Oracle falls hard. He's buying time and betting on a crash. So, who's right? Wall Street at 238 or Burry betting on a collapse? .
Comments 0