Oracle investors cast doubt on its knack for divination

Oracle is on course for about $280bn of capital expenditure over the next 5 years © ReutersOracle investors cast doubt on its knack for divination on x (opens in a new window)Oracle investors cast doubt on its knack for divination on facebook (opens in a new window)Oracle investors cast doubt on its knack for divination on linkedin (opens in a new window)Oracle investors cast doubt on its knack for divination on whatsapp (opens in a new window) Save Oracle investors cast doubt on its knack for divination on x (opens in a new window)Oracle investors cast doubt on its knack for divination on facebook (opens in a new window)Oracle investors cast doubt on its knack for divination on linkedin (opens in a new window)Oracle investors cast doubt on its knack for divination on whatsapp (opens in a new window) Save PublishedDecember 11 2025Jump to comments sectionPrint this pageUnlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.It’s funny how perceptions change. In September, Oracle raised its estimate of next year’s capital expenditure — chiefly building artificial intelligence data centres — by $10bn, and its stock rose more than one-third in a day. On Wednesday, Larry Ellison’s company boosted that forecast again by $15bn, and the next morning its stock slumped 13 per cent. It’s a little like a sundial: the gnomon stays still, but the sun moves around it. In this case, Ellison’s strategy remains essentially the same. Oracle was on course for about $280bn of capital expenditure over the next five years, according to BNP Paribas. Clients including OpenAI, Nvidia and Facebook owner Meta Platforms have collectively committed to $523bn of revenue.But there is a growing lag between cash out and cash in. Wednesday’s bump to 2026’s planned spending wasn’t accompanied by a corresponding increase in revenue. The $80bn-plus fall in Oracle’s market capitalisation shows investors aren’t thrilled about this delayed gratification. Worse, Oracle’s trophy client, OpenAI, has lost ground to rival Google. The big fear is that tech companies racing to hone and sell their AI services profitably might not need all that “compute” after all. It’s a problem for everyone — but more so when assets are funded with debt, as at Oracle. Google or Meta generate masses of cash, but Ellison’s company will burn through $50bn in the next three years, analysts at TD Cowen estimate. Plans might bend; lenders generally don’t.There are two comforts for Oracle investors. First, the delay between money out and money in is small. Oracle’s share of data centre construction — servers and the like — tends to go in just a couple of months before the customer starts using it, unlike the bricks and mortar around them.Second, the size of its debt pile may not end up as cumbersome as feared. Analysts estimate Oracle might rack up $150bn of net borrowings by 2030, up from roughly $100bn today. But its business is growing too. If all goes to plan, Oracle’s net debt would be about 1.5 times ebitda, compared with over 3 times now. Not all data centre investment will be on Oracle’s dime: it suggested on Wednesday that some customers might bring their own chips.Of course, the phrase “if all goes to plan” is doing a lot of heavy lifting. OpenAI, which has pledged $300bn of revenue to Oracle, doesn’t even expect to be cash positive until 2030. Oracle stock is, in effect, a leveraged bet on the ChatGPT maker being able to meet its long-term promises, which explains the swings in the share price. Ellison has about as much control over that as a gnomon does over the movement of the sun.john.foley@ft.comReuse this content (opens in new window) CommentsJump to comments sectionPromoted Content Follow the topics in this article Lex Add to myFT US companies Add to myFT Technology sector Add to myFT US equities Add to myFT Artificial intelligence Add to myFT CommentsIt’s funny how perceptions change. In September, Oracle raised its estimate of next year’s capital expenditure — chiefly building artificial intelligence data centres — by $10bn, and its stock rose more than one-third in a day. On Wednesday, Larry Ellison’s company boosted that forecast again by $15bn, and the next morning its stock slumped 13 per cent. It’s a little like a sundial: the gnomon stays still, but the sun moves around it. In this case, Ellison’s strategy remains essentially the same. Oracle was on course for about $280bn of capital expenditure over the next five years, according to BNP Paribas. Clients including OpenAI, Nvidia and Facebook owner Meta Platforms have collectively committed to $523bn of revenue.But there is a growing lag between cash out and cash in. Wednesday’s bump to 2026’s planned spending wasn’t accompanied by a corresponding increase in revenue. The $80bn-plus fall in Oracle’s market capitalisation shows investors aren’t thrilled about this delayed gratification. Worse, Oracle’s trophy client, OpenAI, has lost ground to rival Google. The big fear is that tech companies racing to hone and sell their AI services profitably might not need all that “compute” after all. It’s a problem for everyone — but more so when assets are funded with debt, as at Oracle. Google or Meta generate masses of cash, but Ellison’s company will burn through $50bn in the next three years, analysts at TD Cowen estimate. Plans might bend; lenders generally don’t.There are two comforts for Oracle investors. First, the delay between money out and money in is small. Oracle’s share of data centre construction — servers and the like — tends to go in just a couple of months before the customer starts using it, unlike the bricks and mortar around them.Second, the size of its debt pile may not end up as cumbersome as feared. Analysts estimate Oracle might rack up $150bn of net borrowings by 2030, up from roughly $100bn today. But its business is growing too. If all goes to plan, Oracle’s net debt would be about 1.5 times ebitda, compared with over 3 times now. Not all data centre investment will be on Oracle’s dime: it suggested on Wednesday that some customers might bring their own chips.Of course, the phrase “if all goes to plan” is doing a lot of heavy lifting. OpenAI, which has pledged $300bn of revenue to Oracle, doesn’t even expect to be cash positive until 2030. Oracle stock is, in effect, a leveraged bet on the ChatGPT maker being able to meet its long-term promises, which explains the swings in the share price. Ellison has about as much control over that as a gnomon does over the movement of the sun.john.foley@ft.com