Ca$htag$: ORCL Becoming AI "House of Cards" as CapEx Concerns Swell

floor. We're in the thick of the action and we've got you covered. And it's time for cash tax. And for that we bring in Landon Swan co-founder of like folio because we're taking a look at Oracle. And you have some data talking about some of the demand. And I thought it was very interesting as the web visits dropped, the stock dropped even more. Tell us a little bit about that. Yeah. I tell you, this is I mean, it's we're talking about web demand. And when we say web demand, this is specific to their enterprise, you know, website. So we're measuring interest from enterprise customers, which is obviously going to correlate fairly well to revenue. And you know, they Oracle is a crazy story. I mean, if you go backwards to September, I think the stock went from 240 to 340 on earnings. And since then it's just been a freefall cut by about two thirds. You know we're hitting like you said the one year lows 116118 right now. And this is the this is the data that I'm talking about that enterprise level web visits on the the yellow line down about 11% on a year over year basis. And the stock obviously is down much more than that on a, on a one year basis. Definitely struggling. But you know, Oracle's all about the this is kind of like the, the leverage play and everyone's, you know, a little maybe concerned that they're going all in and they're, you know, things are getting a little bit tight cash wise. Debt's getting up there. Credit ratings are getting cut and they're, you know, they're pushing their chips in and they've got a lot of future obligations. They got a lot of future revenue coming in, a lot of future spend. Everything is just it's kind of an all in move by them. And I don't think the market is taking that too well, frankly. You know, when you look at, you know, companies like Oracle, a lot of what they do is software as a service, not a ton, but about 21%. That's all extremely vulnerable. I mean, we're talking about HR, supply chain, CRM planning, financials, project management, all that kind of stuff is very vulnerable moving forward with AI software development coming soon, but it's only 21%. I think what everyone has their eyes on is the Oracle Cloud Infrastructure, which is about 30% of revenue growing quickly. And that's where everyone's betting. The legacy stuff is about half. And it's actually fairly defendable. I don't think that's as susceptible to AI development as software as a service lines are. So really it's all about the Oracle Cloud infrastructure 30% of revenue right now. But growing you know, they've got purchase orders backed up, I think, in the $600 billion range, half of that coming from open AI. Everybody's waiting on that IPO as is Oracle. So it's everything's sort of I hate I hesitate to use House of cards, but everything is piling up with a big bet on the future. And I think that's what makes investors nervous. Now the question is at what point is it too cheap? Because, you know, there is there's definitely a good chance that they succeed in 118 could look very cheap in the future. But I think the concern, at least for us, is when we look at that enterprise enterprise website, visit data down 11%, their competitors are actually up. Some of the names that, you know, we are very concerned with are positive. For example, Salesforce, I mean, we're pretty bearish on Salesforce and yet they're plus 8%. So what does that where does that put us on Oracle at -11%. And you know all of these stock charts are pretty brutal when you look at them. But it's not great to be last of a group of companies that, you know, are very susceptible to, to future change. The only thing that, again, I'm scratching my head on a little bit is only about 20% of what Oracle does is super vulnerable. So I don't think the sell off is, is that it's not like, it's not like Salesforce, where I think, you know, their, their entire business model could be upended by, by software development. But I think it's really just a question of leveraging. Are they getting, you know, how are they borrowing too much? Is their free, free cash flow burning too much CapEx going too much? They obviously they're invested heavily in the future. They've got an all in Bet. And that's that's where investors are having to make their decision right now. I think this is one of the more interesting stories in the market right now, because the world is allergic to CapEx spending. They're allergic to negative free cash flow numbers. They want an asset light model and easy. And if that were the case, no one would ever build a home. But Oracle is different. They are spending money. They are taking on debt. They are issuing new stock to build physical assets. And that's unpopular right now. But the the, the bet that they're making, Landon, in my opinion, is this is their wheelhouse data, critical data is what they're best at. And so who else is is better fit to do that. Now the world hates the numbers, hates that they're borrowing money, hates that they're negative free cash flow. Hate that they're issuing stock hate the CapEx numbers, that hatred is either going to dissipate or not go away. But if everything they have bet on comes true, this is going to be a massive winner for them. Their chance to completely win AI is on the on the horizon if they do it. All right, Landon, what am I what am I saying wrong? So I think a lot of investors, especially nowadays, they're, you know, this is a different conversation two years ago, a year ago. But nowadays, a lot of investors think, you know, what could go wrong. And there's a long list for Oracle, right. There's a lot of cascading domino type effects that could lead to problems for this company. And like I said, it's a bit of an all in move for them. But I think you also have to ask if you've got the if you have the risk tolerance, you've got to ask yourself, what if everything goes right? Right. And I think that's the argument that you're making. And this stock, again, is cut by two thirds from September till now it's at one year lows. And, you know, they they obviously have the infrastructure and the hardware that that companies need. I mean, a company like OpenAI or Amazon, the Pentagon, the Navy, all of them are investing money, spending money with Oracle for a reason. And that's because they have what, what it takes to run these companies. And so that's a wide spectrum, right? It's not just the crazy the crazy AI startup and OpenAI. There's a lot of legacy type customers, bigger established companies, including the government that are that are betting on this hardware and these solutions. And so I think you got to ask yourself, what if everything goes right? Yes, it's it's a little concerning right now. I don't like the I don't like the credit rating. It's like just a notch above junk. I believe, you know, if it goes down anymore, there's force selling. I don't like the everything that you listed. I don't want to go over all again. Everything you listed is just like makes me a little nervous. But if they can get over that hump, this could look like the genius move of the year. And it could look like. How could you not have bought Oracle at 118? They're building everything for everybody. And of course it's going to work out. That's what that's how it might look in the future looking back. But we're living in right now. So you got to make your bet. And you got to weigh your risks and your rewards. And so it's a tough call for us. I think that, you know, for me personally, I don't like that their their data is -11. But that backlog is, is very, very healthy. They've got a lot of revenue coming in the future. They're building for success. And as long as, you know, AI implosion doesn't happen, then this company could we could be looking back at 118 being like, wow, that was a unbelievable opportunity. So it's, it's almost a binary bet, which you don't get a lot with a company of this size. Usually binary bets come from, you know, much smaller companies that are going all in one way or the other. But I feel like Oracle is really more of a binary bet. They, you know, if AI works out and everybody goes as far forward as we think they will, then this could be a really cheap stock price. Looking forward or looking backwards in the future. Yeah. And Landon, as I looked at the chart to, I mean, to your point, when you said about Oracle, the down 11% for enterprise software visits, web visits to the IBM, Salesforce and ServiceNow gainers, you know, it leaves you scratching your head, as you said, because maybe this is a point to buy at this point. When I look at a three year chart and I was thinking about the level here at 118, and we're at these 52 week lows, this stock in three years at the end of 2024 was $99. Okay. It was less than 100 bucks and it went all the way up to 345. And now it's back down to 118. So those shareholders have certainly been on a roller coaster ride. And we'll see what comes next. Thank you for all of that data that you