Oracle: A Sticky Wicket?

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Now, Oracle. A curious beast, isn’t it? Just a short while ago, everyone was buzzing about its AI cleverness, picturing mountains of money. They had a deal with OpenAI – a very important, very secretive club – and a backlog so enormous it resembled a dragon’s hoard. A whopping $523 billion, they said. Sounds impressive, doesn’t it? But as any seasoned watcher of the markets knows, a big number doesn’t always mean a happy ending.

This Oracle, you see, has been spending. Spending like a spoiled child with a limitless allowance. Mountains of debt, you understand, and a rather alarming habit of printing new shares. The investors, naturally, began to twitch and fidget, and the stock price, well, it started to resemble a deflated balloon. A bit sad, really.

So, the question is this: should you, a sensible investor, poke your nose into this particular pickle jar? Or should you stand politely to the side and watch the fun unfold?

Oracle and the Thinking Machine Business

On the surface, Oracle looks like a bargain bin bonanza. That backlog, that enormous dragon’s hoard, has grown by a quite astonishing 438% in a year. A truly prodigious number! But underneath the shiny exterior, things are a little…squelchy. You see, Oracle has been borrowing and borrowing to serve all these new customers. As of late, they’re carrying around a debt of $108 billion. A truly monstrous sum! It’s like trying to balance a tower of pancakes on your nose.

They’re planning to raise another $45 to $50 billion, presumably to buy more whizzbang machines. It’s a paltry sum compared to Amazon’s $200 billion spree, but still a significant pile of pennies. The whispers are that OpenAI might not be entirely reliable, and if that deal falls apart, Oracle could be in a bit of a bother. A truly ghastly thought.

Where Does Oracle Stand Now?

The stock has fallen rather dramatically, more than 55% from its peak. A bit of a tumble, wouldn’t you say? But perhaps, just perhaps, this presents an opportunity. A chance to snatch up a bargain before everyone else realizes what’s happening.

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Despite all the debt and spending, Oracle has undeniably benefited from the sudden craze for super-powered computers. They’ve managed to do it rather efficiently, offering their customers a cost-effective solution. This has led to that enormous backlog and a decent slice of the cloud pie.

In the first six months of their financial year (ending November 30th), revenue rose by 13%, with the cloud segment surging by a whopping 31%. And despite all the spending, they’ve managed to keep operating expenses under control, resulting in profits jumping 49% to just under $9.1 billion. Not bad, not bad at all.

Thanks to the recent dip, the P/E ratio has fallen to 28, just a smidge below the average for the S&P 500. And with a forward P/E ratio of 20, investors have even more incentive to take a closer look, despite the mountain of debt and the uncertainty surrounding OpenAI.

A Sticky Wicket, But Worth a Punt?

Given the improving financials and falling valuations, Oracle stock appears to be a buy. A cautious buy, mind you. A bit like approaching a grumpy badger.

Investors should keep a very close eye on that OpenAI deal. If it unravels, Oracle could be in a spot of bother. And those who are thinking of buying should probably accumulate shares slowly, like collecting particularly delicious sweets.

But remember, Oracle has a huge backlog even without OpenAI. With its cloud business firing on all cylinders, investors could earn some rather handsome gains by buying shares now. It’s a sticky wicket, certainly, but a potentially profitable one.

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2026-02-10 19:43