To The Moon

Hi, Tigers~ 👋

Last night after the U.S. market closed, one company sparked major debate among investors — and it wasn’t NVIDIA or Tesla. It was $Oracle(ORCL)$ .

When the earnings report first came out, the market was focused on the surge in AI-related orders. But the narrative quickly shifted:

📉 The stock plunged more than 10% in after-hours trading 💸 Over $40 billion in market value was wiped out

So the question is: If orders are hitting record highs and AI demand is booming, why did the stock drop instead? Today, let’s break down this earnings report.

1. Key Earnings Highlights: Orders Are Booming, but Cash Flow Pressure Is Huge

Let’s start with a few key numbers.

• Q3 Revenue: $16.1 billion

• Roughly flat compared with the previous quarter

From a revenue perspective, the results weren’t bad — but they weren’t particularly impressive either.

The Real Highlight: RPO Surges

The most eye-catching metric in the report is RPO (Remaining Performance Obligations).

📊 Up 40% year-over-year 📊 25% growth last quarter

In simple terms, this represents orders that have been signed but not yet recognized as revenue.

In other words:

👉 The pipeline of future revenue is expanding rapidly.

Management also emphasized that:

Demand for AI cloud services is accelerating, and the backlog has reached a record high.

Many of these contracts come from heavyweight clients, including:

• $Meta Platforms, Inc.(META)$

• $NVIDIA(NVDA)$

The company also revealed that its collaboration with OpenAI is progressing.

If you look at this metric alone, the outlook actually appears very bullish.

2. But There’s an Obvious Concern: Cash Flow Suddenly Turned Negative

What the market is really worried about is cash flow. Free cash flow: –$10 billion

Why did this happen?

There’s essentially one reason: Massive spending on data centers.

The company’s capital expenditure plan shows:

📊 FY2026 CapEx: $45–50 billion

To put that into perspective, many cloud companies don’t spend that much in an entire year.

Simply put: Oracle is pursuing AI with an extremely aggressive investment strategy.

3. The AI Race: Oracle Doesn’t Want to Be a Supporting Player

For many investors, Oracle used to be known primarily as:

👉 A traditional database company

But now the company clearly wants a new identity:

👉 An AI cloud infrastructure provider

There was also an interesting detail in the earnings call.

For the first time, management mentioned Cerebras Systems chips, placing them alongside two major AI chip giants:

• $NVIDIA(NVDA)$

• $Advanced Micro Devices(AMD)$

This suggests something important:

Oracle is trying to build a “multi-chip AI cloud.”

In other words: It doesn’t want to rely solely on NVIDIA.

4. Why Didn’t the Market Buy the Story?

From a strategic perspective, Oracle is doing something quite typical:

Transitioning from a traditional software company → to an AI infrastructure provider.

But the problem is:

📌 The investment is enormous

📌 The payback period could be long

Right now, the capital market is asking:

When will it become profitable?

Rather than:

Whether it can become profitable someday.

This leads to a classic conflict in investment logic:

Growth investing logic: AI orders are booming → long-term bullish.

Value investing logic: Negative cash flow → significant risk.

So the result is simple:

📉 The stock drops first, and questions come later.

5. Tiger Research’s Take

If I had to summarize this earnings report in one sentence: The fundamentals look solid, but the market is spooked by the scale of spending.

Key positives:

✔ Strong growth in AI-related orders

✔ Continued contracts with major clients

✔ Cloud business momentum building

But at the same time:

❗ Capital expenditure is extremely aggressive

❗ Short-term profit pressure

❗ Free cash flow has turned sharply negative

So right now, Oracle is in what many companies experience during major strategic shifts:

A classic “transformation pain period.”

6. Investment Strategy

📉 Short-term traders

Market sentiment is currently weak, and volatility may not be over yet.

📈 Long-term investors

If you’re focused on the AI infrastructure theme, Oracle could become an interesting player.

After all:

• Its clients include Meta Platforms

• Its partnerships involve OpenAI

• Its GPU ecosystem is tied to NVIDIA

This suggests the company already has a place within the AI compute ecosystem.

Final Question for Everyone

This earnings report is actually quite fascinating because investor opinions are sharply divided.

Some believe:

👉 The surge in AI orders represents a major opportunity.

Others think:

👉 Cash flow deterioration signals significant risk.

So I’m curious what you think:

💬 If Oracle keeps falling, would you consider buying the dip?

A. Yes — the long-term AI cloud thesis still holds

B. No — the spending is too aggressive

C. Stay on the sidelines for now

Feel free to share your thoughts in the comments. Are you on the AI bull side, or the cash-flow-first side? 🚀

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