“Oracle’s 5-year CDS traded near 200 basis points while the investment-grade index sat near 53.”
ORCL was around $148 on August 10. Now it is back there, and everyone is acting like the credit market just found something new.
Everyone sees CDS at roughly 4x the IG index and starts planning Oracle’s funeral. That’s the most NPC way to read this.
The credit market is charging more to insure Oracle because Oracle is spending like it has a $664B backlog to build for.
Because it does.
Alright regards, smooth-brain translation:
- Oracle has $664B in RPO.
- That is contracted backlog, not Larry’s imaginary friend.
- OCI revenue grew 121% year over year.
- Operating cash flow hit a record $23B.
- Free cash flow went negative because capex hit roughly $28B.
Everyone is staring at number five like they just discovered fire. Negative free cash flow is what happens when you build capacity for $664B that is already waiting to be served. Apparently this is controversial now.
The cash is being generated. The market just wants Oracle to finish building the future before it admits the future exists.
S&P moved them to BBB-. Cool. Still investment grade. CDS widened. Cool.
The stock already knows people are scared. Meanwhile Oracle keeps signing AI cloud contracts faster than people can type “OpenAI counterparty risk” in the comments.
The CDS didn’t discover risk.
It rediscovered the same panic at $148.
ORCL was around $148 in August. It is back around $148 now because the market keeps mistaking buildout costs for permanent damage.
Same panic. Same price. Different headline.
ORCL $200 before December.
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