Oracle: The AI Capex Blunder Explained

Summit Research10.98K FollowersFollow5ShareSavePlay(19min)CommentsSummaryOracle Corporation faces valuation pressure after raising its FY 2026 capex guidance by $15 billion without a corresponding growth uplift, fueling ROI and AI funding concerns.ORCL delivered 433% y/y RPO growth in Q2 FY 2026, confirming robust AI-driven demand outlook.But the combination of rising capex intensity, protracted negative FCF, and widening funding needs has amplified investors' angst over ORCL's ability in accelerating backlog conversion and delivering sustained margin expansion.As a result, the contrast between muted near-term revenue uplift and an intensifying capex cycle has emerged as a key multiple compression risk for ORCL.ORCL stock's post-earnings pullback was a needed recalibration to better reflect the embedded execution risks. A sustained recovery will likely hinge on several quarters of evidence that rising capex is translating into profitable AI-driven growth at scale.

Getty Images Oracle Corporation’s (ORCL) post-earnings stock performance was a classic representation of a broader pattern that’s been emerging across the current earnings season. The stock’s pullback was a response to Oracle’s higher-than-expected capex outlook for fiscal 2026, whichThis article was written bySummit Research10.98K FollowersFollowSummit Research focused on finding fundamental- and catalyst-driven long/short ideas in the tech sector. Key industries covered include big tech, electric vehicles and autonomous mobility, semiconductors, software, and AI.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You