ORCL — All updates

Oracle is being forced to move forward in the field of artificial intelligence. Today we will begin with the news that Oracle has declared force majeure on a new data center project in New Mexico.

In short, Oracle claims that it is not responsible for costs or expenses in the event of delays to this project, I believe it is called Project Jupiter. It is supposed to start operating in 2028.

Today we're talking about Oracle, that's our area of expertise, Cory. Let's talk again about Oracle, which made headlines and cited force majeure to protect itself from its data center.

What did you think of this when you first saw it?

Because there are many aspects worth discussing, I would like to ask you about everything related to Oracle. You can take everything I say with caution. Someone at Oracle said, "Why do you always say this before you talk about us?"

But I want you to know that I am biased. Okay, I'll give you my honest opinion, but you need to understand my bias. I was worried. Now I see this and I wonder: "Force majeure?"

I hope there isn't a hurricane in Texas. In fact, no one knows. This is generally the purpose of this clause, which is to deal with events beyond the company's control, i.e., major events that trigger force majeure.

I want to understand what this clause means, but I want to think about it in the context of Oracle.

Oracle is taking steps to protect itself from potentially increased costs associated with its massive data center in New Mexico, according to Bloomberg.

The company issued a force majeure notice to the project developer, Blue Owl, as regulatory hurdles threaten its planned 2028 opening.

But the same concerns that may have started to surface a little in some people over the summer regarding spending cash flow and everything, Oracle in many ways was a kind of model for this kind of influence on the part of some of these broadband cloud companies.

You have received a force majeure notice today. I am interested to know your opinion on this, as it perhaps represents the opposite, or less optimistic, side of the news we have received about artificial intelligence today.

We've got credit default swaps skyrocketing well past 2008 levels for Oracle. And today Oracle is in the news for sending a force majour notice to stack infrastructure which is the blue owl developer for project Jupiter in New Mexico.

Apparently, the problem is their natural gas pipeline that they need to fuel their blue uh or bloom energy fuel cells is delayed yet again. And so this is leading the stock to sell off and leading once again to renewed fears about the artificial intelligence concentration of economic power so to speak.

In this case, although I wasn't very interested in the previous three stocks, I am very impressed with this stock now at the current prices. It is the long-established technology giant that has reinvented itself to become a major provider of cloud computing services, Oracle, codenamed ORCL, in which Cohen nearly tripled his stake, acquiring more than $300 million in additional shares.

When Oracle signed a $300 billion deal with OpenAI, the stock skyrocketed and investors were really bullish on the company's future as an infrastructure play in artificial intelligence.

But it's been nothing but downhill for the company since then. Shares are down over 50% over the past year. And there's a huge problem that is rearing its head for Oracle and really all of the Neoclouds out there.

As the industry has burned through all of its free cash flow, it's now relying on debt to fund the AI buildout. And that debt is getting more and more expensive.

let's just talk about why you think Oracle is a buy here. I mean, it's off what, 26% year-to-date. What makes this such a good entry point right now?

If you want to look at the technical's for a really quick second because you're concerned about the downside and how rough a ride it's been this year, then you can look at somewhere in the low 100's to somewhere at around 160, 165.

That's the big trading range that it's stayed in. So, you could buy some here or you could buy some at 120 or 110 if it goes down a little bit, but it's trading at if I remember correctly, I mean, it's definitely it's definitely in the low 20's on a PE, no higher than that.

Oracle is your next pick in the big three. They are trading lower. We're down about 4 and a4% uh on the news here caught up in the sell-off, but what I just mentioned about that Open AI IPO getting pushed off till at least 2027 may come into play here with your thesis around Oracle.

Oracle is the next stock on our list. That's ticker OCL. Co-founder Larry Ellison has scrapped a plan to sell up to 50 million shares of the cloud computing giant. That's worth about 7.5 billion based on the previous closing price of the company shares.

Oracle shares down another 3.58% in the pre-market.

The second one is going to be Oracle, ticker O RCL, We have Oracle that's obviously a massive player in the AI infrastructure. Unfortunately, from some of its peaks, the stock is down nearly 50%, actually a little bit higher than that, 52%.

Oracle sitting at again interesting levels, $150, right? $150 right now after earnings, which I thought earnings were great. Year to date, the stock is down nearly 46%. And like we saw from its one-year high uh 52- week high, the stock is down nearly 54%.

Oracle just reported quarterly financial results and the stock is up over 3% in the after market hours. The company reported an additional $30 billion in backlog just from 3 months earlier and it's RPO, remaining performance obligations, have soared to $664 billion.

But does all of this make Oracle stock a buying still? Remember I've had the stock ranked as a buy, so I'm happy to see the share price increasing. But let me share with you these latest results and let me share with you my updated estimates for fair value and update you on my ranking for buy, hold, or sell for Oracle stock following these results.

I felt the results were great, but the what Wall Street hates the stock. It really is interesting. After hours trading, this this stock was up about 7 or 8% yesterday after the results came out.

The stock was performing well in the first couple hours of trading this morning and really fell off.

Now, this morning we did get CPI data and that's what I mean by that, right? So, we've seen oil rally up all week long until the pullback today. Sure, it hit my key4 104 level and pulled back, but still it was a tremendous move recently in oil and that added inflation issues that really the Fed has to come out and combat now.

So obviously we have escalation in the Middle East continuing over the straight of Hormuz. Now the Red Sea, now strikes by the Houthis on Saudi Arabia, oil facilities. All of this adding to the turmoil that adds to inflation.

Now let's talk about the CPI report here today. So CPI report coming out this morning basically in line except for one number that was hotter than expected. Yesterday I discussed how if we had an amazingly good acrosstheboard CPI report maybe the Fed wouldn't have to hike.

That didn't happen. We got a inline slightly hotter than expected CPI report. You can see right there core CPI coming in hotter than expected at 3% versus the 2% anticipated. Every other number was in line.

It's done folks. the Fed is going to have to hike next week no matter what the president says. All right, so that's number one. Now, speaking of which, let's talk a little bit about what the Fed or what the odds are because this is pretty remarkable, folks.

The odds of a Fed rate hike next Wednesday sit right now at 86.5% chance. In Fed terms, that's essentially a sure thing. That's as almost as good as the the inside information that some of our politicians trade off of.

I mean, that is that good. Now, again, how do we play this? There's not really a major way. But my point still remains is that this is a lock for a raise next week. And there's no major economic data.

I mean, the only thing that could maybe sway is if the the price of oil gapped sharply lower by like $20 next week on a deal. Even then, it's likely the Fed will be raising rates.

All right. So, we have a scenario here where next week we have a two-day Fed meeting Tuesday and Wednesday. The decisions out at 2:00. Then at 2:30 there'll be a press conference.

Those are the main factors that we need to watch next week. We're kind of in this interim period now after Oracle earnings.