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Overnight risk sentiment is “subdued after weaker revenue and higher capex requirement from Oracle”, reports
Mohit
Kumar
of investment bank
Jefferies
.
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
“Oracle sold Ampere because we no longer think it is strategic for us to continue designing, manufacturing and using our own chips in our cloud datacenters.
We are now committed to a policy of chip neutrality where we work closely with all our CPU and GPU suppliers. Of course, we will continue to buy the latest GPUs from NVIDIA, but we need to be prepared and able to deploy whatever chips our customers want to buy. There are going to be a lot of changes in AI technology over the next few years and we must remain agile in response to those changes.”
The company continued to burn cash last quarter: its free cash flow reached a negative $10 billion. To make matters worse, the company said that it expects capex to reach about $50 billion in the fiscal year ending May 2026 – $15 billion more than its September forecast – and investments at Oracle are financed by debt: overall, the company has about $106 billion in debt.
Frankly, the report was not dramatically bad, but it came to confirm concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation, sending Oracle shares down by more than 11% in after-hours trading.
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