Oracle: The $28B CapEx Illusion And The Reality Of Software Cannibalization

Elina Selianska 1.11K Followers Follow Summary Oracle Corporation reported strong cloud growth and raised its revenue outlook, but underlying revenue growth was minimal despite massive capex deployment. Cloud gains are offset by collapsing on-premises software revenue, leading to only modest net growth and margin compression as high-margin software is replaced by capital-intensive infrastructure. Free cash flow has turned negative due to $90–95 billion in annual capex, funded by a $20 billion secondary share offering, with shareholders bearing the cost. Issue a Sell rating: ORCL risks transforming into a low-margin utility as overcapacity looms, with future profits threatened by a supply glut and falling compute rental rates. mtcurado/iStock Unreleased via Getty Images At first glance, Oracle Corporation's ( ORCL ) report for the first quarter of fiscal year 2027 looks like an absolute triumph of the artificial intelligence revolution. The leadership reported cloud segment growth This article was written by Elina Selianska 1.11K Followers Follow I am a private investor with 10 years of experience in the stock market. My approach to fundamental analysis probably differs from the classical method. I am firmly convinced: first, you must understand the business, and only after that look at the figures. For me, investing is an attempt to understand the place of a company or an asset in the future. Financial reports reflect only the past and the present. Therefore, my analysis always begins with an attempt to thoroughly understand the essence of the company itself. On what is this business really built? What value does it create today? And, most importantly, how will this business be integrated into the economy of tomorrow? I evaluate ideas through the prism of a long-term perspective. Before opening a trade, I must clearly see the place of this company in the world in 5–10 years. I am interested in what management is doing right now in order to capture the markets of the future. Multipliers, balances, and charts are secondary — they should only confirm the fundamental idea, not dictate it. I write on Seeking Alpha to share exactly this approach: helping readers see the real business behind dry numbers and evaluate its future potential. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.