Oracle shares rose 9.3% on Wednesday after CoreWeave's strong quarter eased some worries about AI debt. The Motley Fool's author remains unconvinced that Oracle is out of the woods if the economics of AI shift.
Oracle stock rose 9.3% as of 2:20 p.m. ET on Wednesday, Nov. 11, after an AI cloud rival's strong quarter eased some of the market's worries about AI debt. The broader market also moved higher, with the S&P 500 and the Nasdaq Composite up 1.4% and 1.9%, respectively.
CoreWeave beats expectations and raises guidance
The trigger came from CoreWeave, which reported its Q3 numbers on Tuesday, Nov. 10, after the bell. Sales jumped 168% to $3.66 billion, better than what Wall Street was looking for. The company also raised its guidance and said it had plenty of access to the funding it needs to grow.
On funding, CoreWeave said it would pull back on unsecured borrowing and rely more on project-level financing and alternative sources such as customer prepayments.
Oracle faces the same AI financing questions
Oracle has traded under a similar cloud of worry about its own use of debt. The company has jumped headfirst into AI data centers and has needed plenty of outside funding to build the capital-hungry facilities. According to the article, CoreWeave's positive quarter was taken as a sign of health for the whole industry.
The author, however, is not convinced. He argues that if the economics of AI shift, Oracle could find itself in a precarious position, struggling to earn a return on its sizable investments.
Source: The Motley Fool
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