Let me get this straight:
- Oracle announces $455B in RPOs through 2030, driving stock up 40% in a single day
- $300B of this (66%) depends on a single contract with OpenAI starting in 2027
- OpenAI's funding for this contract comes from SoftBank's $500B Stargate commitment
- SoftBank's total assets are $300B – meaning they'd need to liquidate their entire company just for the Oracle deal
- This is the same SoftBank that valued WeWork at $47B then watched it collapse, promised $108B for Vision Fund 2 but only raised $56B, and has a 30+ year track record of overpromising and underdelivering
- SoftBank funding is contingent on OpenAI converting from a nonprofit to a for-profit, which California AG is investigating and could require a $30B+ payment
- Even if all this works out, Oracle's RPO delivery doesn't start until 2027 – giving 2+ years for this house of cards to collapse
- Oracle's current market cap surge assumes a company with $168B in assets and under $15B in Q1 2025 revenue will somehow deploy $800B+ across multiple AI infrastructure commitments
So Oracle's stock price is essentially a 3x leveraged bet on SoftBank's ability to fund commitments that exceed their entire balance sheet, while navigating regulatory hurdles, legal challenges, and their own history of spectacular failures?
Is $ORCL secretly SoftBank in a mask?
byu/OverwroughtPraise instocks
Posted by OverwroughtPraise
5 Comments
Tell us how you really feel
It’s not a scam until it is one. Earnings and unemployment would have to be bad in order for the market to start worry about fundamentals again
This is pretty interesting, I haven’t seen an analysis like this yet. I think you’re omitting OpenAI’s revenue thought. It isn’t like the company is only funded by the stargate commitment; they’re making $10B a year. Granted, that’s a far figure from $300B, but they could pay it off incrementally over time.
I don’t disagree that the entire thing is ridiculous and will probably blow up, but you’re giving OpenAI less credit than they deserve. $10B annualized revenue growing 20%+ yearly is strong, maybe strong enough to pay off their obligations Oracle from the funds raised if they go public
So, OpenAI needs to come up with about $75bn/yr in 2027-30? Their revenues *could conceivably* be $50bn/yr by then, so it’s not wholly dependent on Softbank. I’m guessing the revs will be more like $35bn/yr though. Maybe 10-20bn if net revs. But I agree: I don’t see how OpenAI gets there without substantial investments–and likely from Softbank.
A great deal of the valuation is leveraged on the uncertainty of the AI landscape. Given current conditions, it does seem a bit foolhardy to blindly put faith in SoftBank/OpenAI to fully follow through despite past failures. However, it’s impossible to really tell what AI will look like in two years. It’s very plausible that a breakthrough in architecture/application will occur, giving the AI industry another boost. For reference, the whole AI boom has occurred in the last 3 years