Analyst says Oracle faces compute and capital constraints ahead of earnings
DA Davidson's Gil Luria said Oracle can sell any compute it has, but its growth depends on overcoming compute capacity and capital constraints before earnings.
Oracle Corp. (NYSE: ORCL ) heads into earnings this week with demand not in question, according to DA Davidson’s Gil Luria, who said the real test is whether the company can overcome constraints on capital and compute capacity to sustain its growth trajectory. Real Constraints are Compute and Capital In an interview with CNBC on Friday, Luria said Oracle faces two challenges heading into earnings. Data center buildout is one challenge, he said.
The company relies on “a handful of large projects,” including a New Mexico facility that can’t secure a gas connection, so a single project stumbling puts revenue growth at risk. Capital is the second, as Oracle entered the AI cycle with a heavily leveraged balance sheet after taking on debt to acquire Cerner, leaving it with little flexibility. Luria said investors will be watching for confirmation that Oracle completed an at-the-market equity offering launched earlier this year, with debt paydown essential to sustaining its current trajectory.
Read Also: Elon Musk Says Humanity Will Need ‘A Lot of Mass’ to Reach Moon and Mars as SpaceX Targets Over 30 Starship Launches a Day by 2030 Demand Isn’t the Problem “Demand is not a problem,” the analyst said. “They could sell any compute they have, and in fact, they’d be better off selling it” on the market rather than locking in long-term contracts. Space Exploration Technologies Corp. 25 billion a month, giving the AI startup access to its full Colossus data center capacity, while Meta Platforms Inc.
(NASDAQ: META ) was reportedly in early talks in July to lease up to $10 billion in computing capacity to Anthropic over two years. ” Wall Street Expect ations Oracle is scheduled to report first-quarter fiscal 2027 earnings on Sept. 10 after market close. 13 billion.
05. 09 billion, according to Pro. 89 per share. 42% over the past year.
58% in extended trading. Edge rankings indicate Oracle’s stock has a Momentum score in the 6th percentile and a Growth score in the 96th percentile. Read Also: Scott Bessent Predicts Oil Could Sink to $40-$50 After Iran War Ends — Peter Schiff Warns ‘Don't Believe Anything' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published editors. Photo courtesy: Shutterstock