Locator: 50941ORACLE.
Tag: tech chips AI LDC LDCs
From Yahoo!Finance, morning brief:
There's a specific reason for posting this note.
For investors looking to assess the state of the AI trade whether demand in the cloud space is holding up, look no further an Oracle's (ORCL) fiscal fourth quarter earnings on Wednesday.
While Larry Ellison's Oracle saw an extended down period through the first quarter of the year, the company is now up 12% year to date, and Deutsche Bank analyst Brad Zelnick said demand for its services should remain healthy as the AI boom keeps accelerating.
"Demand for AI infrastructure has driven a real inflection in public cloud revenue and backlog growth, enabling long-standing leaders to reaccelerate off an increasingly large base," [Deutsche Bank analyst Brad] Zelnick wrote.
The stressor to watch for companies like Oracle, Zelnick warned, is the "upfront costs required to massively scale new capacity to meet demand" — increasingly financed not through cash flow but debt markets. [Google may have been one of the first to scare the market in issuing more stock to raise cash.]
The five major hyperscalers issued roughly $121 billion in US corporate bonds in 2025, more than four times their 2020–2024 annual average of $28 billion. In 2026, that figure is projected to reach $175 billion, per Bank of America, with Oracle the largest issuer in class.
Major debt issuance isn't necessarily a problem so long as the industry's massive AI investments ultimately produce returns that justify the growing leverage burden. The risk, of course, would be that demand dries up, leaving these companies over-leveraged without the revenue to support them [i.e., a bubble that bursts].
