For ORCL, the historical numbers might not tell you very much,
because they are planning to significantly ramp up both capex and
borrowing over the coming years. So the concern is about the
[economics of the business in the] future.
Let's look at the street's forecasts for FY2028. ORCL has
a May year end, so that would be 2027 for some people. The
average forecast for net debt and EBITDA gives us a net debt:EBITDA
of about 2.4x. At first glance it could be manageable,
putting aside for a moment the motivations of sell-side analysts,
which, let's say tends to influence their estimates.
But one wants to consider, among other factors, what kind of
assets are on the B/S, and their ability to generate cash flow.
In this case, they are data centers filled with GPUs.
What is the productive life of a GPU? Well, I think
that it was earlier this year that during an Nvidia AI conference,
Jensen quipped that with the launch of the newer and more
powerful Blackwell GPUs, “when Blackwell starts shipping in
volume, you couldn't give Hoppers away,” suggesting jokingly that
the older Hopper GPUs might have so little value they'd be
difficult to dispose of even for free. (I saw that as a
very rare foot-in-the-mouth moment for Jensen.) Perhaps they
could be used for inference, but I would guess that not many
hyperscalers would still use them for training. That would
imply that their ability to generate cash flow could be
significantly impaired. And that is over just 2 years.
OTOH also relevant for consideration is that most hyperscalers
still have a depreciation period for their servers of 5-6 years.
Although if their auditors are listening to Jensen perhaps
that will have to change.
Newsletter
Subscribe to our email list for regular free market updates
as well as a chance to get coupons!
> Do you also have
ORCL and AI earning shell game - ORCL 550% Debt to Equity, blows anything from the others
Posted by joss22 on 17th of Nov 2025 at 12:24 pm
> Do you also have a calculation for ORCL ?
For ORCL, the historical numbers might not tell you very much, because they are planning to significantly ramp up both capex and borrowing over the coming years. So the concern is about the [economics of the business in the] future.
Let's look at the street's forecasts for FY2028. ORCL has a May year end, so that would be 2027 for some people. The average forecast for net debt and EBITDA gives us a net debt:EBITDA of about 2.4x. At first glance it could be manageable, putting aside for a moment the motivations of sell-side analysts, which, let's say tends to influence their estimates.
But one wants to consider, among other factors, what kind of assets are on the B/S, and their ability to generate cash flow. In this case, they are data centers filled with GPUs. What is the productive life of a GPU? Well, I think that it was earlier this year that during an Nvidia AI conference, Jensen quipped that with the launch of the newer and more powerful Blackwell GPUs, “when Blackwell starts shipping in volume, you couldn't give Hoppers away,” suggesting jokingly that the older Hopper GPUs might have so little value they'd be difficult to dispose of even for free. (I saw that as a very rare foot-in-the-mouth moment for Jensen.) Perhaps they could be used for inference, but I would guess that not many hyperscalers would still use them for training. That would imply that their ability to generate cash flow could be significantly impaired. And that is over just 2 years.
OTOH also relevant for consideration is that most hyperscalers still have a depreciation period for their servers of 5-6 years. Although if their auditors are listening to Jensen perhaps that will have to change.