Oracle selloff discounts execution risk, but New Mexico power delay and funding strain keep us on WAIT

What happened

Seeking Alpha argues ORCL at ~$127 looks cheap relative to fiscal 2030 earnings, but that multiple embeds substantial execution risk already flagged in our DeepValue report. The company raised its funding cap to $20 billion, adding 2.85% share dilution and $776.75 million annual interest, which pressures per-share economics. Alphabet TPUs arriving in 2027 diversify Oracle's AI infrastructure supply, yet capacity and financial terms remain undisclosed, so the benefit is unquantifiable today. Our base case values Oracle at $132, with bear and bull scenarios of $95 and $160, respectively, leaving no clear edge at current prices. The New Mexico power delay remains the key project-level risk, as it could cascade into broader lease and capex timing mismatches.

Implication

Investors should treat the current $127 price as fairly reflecting known execution risks rather than a bargain entry point. The article's 2030 EPS-based optimism ignores that only 13% of RPO converts within 12 months while capex and lease commitments are front-loaded. A buy requires evidence that customer prepayments continue, off-balance-sheet lease growth moderates, and the New Mexico power issue does not spread. Conversely, a decisive break above $155 would signal the market is pricing successful AI ramp execution and justify a more bullish stance. Until then, the WAIT rating stands, with $115 as a more attractive entry if financing strain worsens.

Thesis delta

The article suggests Oracle is a Buy at $127 due to valuation versus 2030 earnings, but our master report maintains WAIT because near-term funding strain and project timing dominate. The Alphabet TPU deal adds optionality but lacks disclosed capacity or financial terms, so it does not offset the 2.85% dilution and added interest burden. No change to our rating; we need filings to prove prepayments sustain capex and RPO conversion improves.