Oracle finds itself pulled in opposite directions. On one side, the software giant is riding a wave of demand for AI computing power that has produced blockbuster contracts and staggering growth rates. On the other, the cost of feeding that demand — and the operational and security headaches piling up along the way — is testing the patience of investors who have already knocked the stock down sharply this year.
The share changed hands at EUR 122.88 at Thursday’s close, leaving it 26% lower since the start of the year and roughly 55% below its 52-week high. Pre-market trading on the following session pointed to EUR 123.84, a modest 0.8% gain, though the year-to-date picture remains sobering. That gap between the company’s soaring ambitions and its market valuation tells the story of a business dancing at too many weddings at once.
A Tencent Lifeline Worth $7 Billion
The most promising development comes from Asia. According to the Financial Times, Tencent has agreed to a five-year lease granting access to roughly 100,000 advanced AI chips housed in Southeast Asian data centers. The contract’s value is estimated at around $7 billion. Neither Tencent nor Oracle has confirmed the arrangement, and Reuters was unable to independently verify it.
Should the deal materialize, it would address one of Oracle’s most glaring vulnerabilities: an order book dangerously concentrated in a handful of clients. Analysts at D.A. Davidson estimated that OpenAI alone accounts for about half of Oracle’s computing-capacity backlog. A Tencent agreement would chip away at that dependency.
There is a practical logic driving the arrangement. Chinese firms, boxed out of cutting-edge hardware at home by strict U.S. export controls, are increasingly turning to overseas facilities. The deal is also said to include a prepayment of roughly 30% — welcome liquidity for a company burning through cash at an extraordinary clip.
Cash Burn Reaches Alarming Depths
That liquidity is needed precisely because Oracle’s growth engine comes with a punishing price tag. In the first quarter of fiscal 2027, Oracle Cloud Infrastructure revenue surged 121% year over year, and total quarterly revenue climbed to $19.345 billion. But capital expenditures ballooned to keep pace, pushing free cash flow to negative $5.396 billion for the quarter.
Management softened the blow by raising nearly $20 billion in net proceeds through a large equity program — a move that shores up the balance sheet but dilutes existing shareholders. Meanwhile, the company’s remaining performance obligations, contracts not yet recognized as revenue, reached $664 billion at quarter’s end. The catch: that money arrives only as services are delivered, while the billions in hardware and construction costs come due immediately.
Should investors sell immediately? Or is it worth buying Oracle?
New Mexico: Megawatts, Delays and a Force Majeure Letter
The physical buildout is proving just as thorny as the financial one. Project Jupiter, a data-center campus in New Mexico slated to deliver 2.45 gigawatts of capacity, has run into delays tied to power supply and pending permits. On September 24, Oracle sent a force majeure notice to a unit of Blue Owl, with STACK Infrastructure handling construction of the facility intended to serve OpenAI.
The letter’s purpose was to defer payments should the project slip. Oracle, Blue Owl and STACK Infrastructure all insisted they remain aligned and that financial obligations are unchanged. Even so, the maneuver laid bare the fragility of timelines that depend on power infrastructure and fuel-cell systems coming online. The target for operations is 2028, and flooding in the area — while sparing critical infrastructure — underscored how exposed the plans are to forces beyond the company’s control.
A Security Breach That Won’t Stay Buried
While the market fixates on cloud megaprojects, Oracle’s legacy business has its own troubles. On September 25, Google disclosed that the hacking group ShinyHunters was exploiting a vulnerability in Oracle’s PeopleSoft enterprise software on a mass scale. The attackers even claimed to have reached FBI data through the flaw — an assertion Reuters could not confirm.
The incident strikes at a tender spot. PeopleSoft runs HR and finance operations for countless corporations and government agencies. When core applications like these repeatedly spring leaks, customer confidence erodes. The fallout isn’t limited to costly patch cycles; reputational damage can linger far longer. It is a reminder that cybersecurity demands constant attention, even as AI euphoria dominates the headlines.
The Tightrope Ahead
Oracle’s leadership is making bold strategic bets, locking in multi-billion-dollar contracts and expanding into overseas markets with scarce hardware. But the company is simultaneously planning gigantic data centers, supplying foreign clients with coveted chips and defending its traditional software against cyberattacks — a juggling act that invites the risk of overextension.
On the discounted valuation, the long-term case for Oracle’s cloud transformation has merit. Near term, though, the combination of negative cash flow and a heavy debt load argues against any quick all-clear. Before shareholders’ patience wears thin, Oracle must prove that the computing capacity it has promised can actually reach the grid on schedule.
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