Is Oracle a ticking time bomb? 💣
Most people are blinded by the AI hype. But if you look at the balance sheet, the red flags are screaming. 🚩 Here is the $248 BILLION reality check that nobody is talking about: 1. The Off-Balance-Sheet Trap Oracle has committed to $248 billion in lease commitments for AI data centers. These aren't just numbers—they are massive legal obligations that kick in fully by 2028. 2. The Cash Flow Problem Capex is set to double to $50 billion. Meanwhile, Free Cash Flow (FCF) is expected to stay NEGATIVE for years. They are spending money they haven't made yet to build infrastructure they hope people will use. 3. The "Duration Mismatch" This is the silent killer. Oracle is signing long-term leases (decades) to support short-term AI contracts (months/years). If AI demand softens? The revenue vanishes. The lease payments? They stay forever. The Bottom Line: Oracle is betting the entire farm on the AI revolution. If the bubble bursts—or even just leaks—their solvency isn't just "threatened." It's in danger. 📉 We’ve seen this movie before (1999, anyone?). Leverage is a great tool until the music stops. Is Oracle the first domino to fall, or is this just the price of winning? 👇 Let’s discuss in the comments. Source: Global Markets Investor
Margin Debt increased +42% in the past 7 months. Investors went all-in.
This only happened 5 times before, and the S&P 500 was lower 1 year later every time. The last 2 times? February 2000 & May 2007 Source: Subu Trade @SubuTrade
Oracle’s primary data center partner, Blue Owl Capital, has officially walked away from a $10B deal to fund a massive 1GW facility in Michigan.
Why? Because the "growth at all costs" era of AI is meeting a harsh new reality: Debt. The Breakdown: 🚀 The Ambition: Oracle is trying to build a $300B infrastructure bridge for OpenAI. 💸 The Debt: Oracle’s net debt has ballooned from $78B to $105B in just one year. Forecasts show it hitting $290B by 2028. 🛑 The Pivot: Lenders are getting nervous. They are demanding stricter terms, higher rates, and more collateral. The Lesson for Leaders: Even the giants aren't immune to market sentiment. Blue Owl—the pioneer of these massive sale-leaseback deals—decided the risk no longer matched the reward. While Oracle says they are moving forward with a new (unnamed) partner, the message from Wall Street is clear: The blank check for AI infrastructure is being cancelled. Investors are no longer just asking "How fast can you build?" They are asking "How are you going to pay for it?" We are moving from the Hype Phase of AI into the Sustainability Phase. Only those with the strongest balance sheets will survive the transition. Oracle $ORC stock is down -5% on the news!
2026 Warning 🚨: Going back to 1926, the S&P 500 has seen an average drawdown of 18.2% in the 12 months before midterm elections
📉 Going back 60 years, the smallest drawdown has been 7.4% while the largest was 41.8% 🤯 After the midterms, all is well, but before? 🤔👀 Source: Barchart
Software Stocks are now underperforming Semiconductors by the largest margin in more than 23 years
Source: Barchart
Technical analysis reinvented with Novo Nordisk $NVO Christmas Tree
It's the most wonderful time of the year 🎶 Source: Trend Spider
As rightly said by Eric Balchunas many strategists are calling for rotation out of Mag 7 next year..
But let's be honest they said same thing this year and Mag 7 beat market YTD and crushed it since Liberation Day. Will 2026 be different? Source: Bloomberg
In case you missed it...Tech may finish the year with a lower Forward P/E than it began the year...
Tech bubble? Are you sure? Source: Seth Golden @SethCL Factset
