Oracle(US:ORCL) Hua Er Jie Jian Wen·2026-01-06 07:03Core Viewpoint - Wall Street is currently experiencing extreme anxiety, highlighted by Oracle's stock price plummeting 41% since mid-September, while bulls are betting on a "stunning reversal" in the first half of 2026 [1] Group 1: Market Sentiment and Concerns - The market's panic is primarily driven by two concerns: extreme distrust in OpenAI's financial sustainability and worries about Oracle's ability to maintain its investment-grade rating amid aggressive capital expenditures [3] - Investors believe that if OpenAI can secure funding or launch a new model like GPT-6 by early 2026, Oracle, trading at 34 times CY27 earnings, could represent a significant buying opportunity [3] - Conversely, if OpenAI fails to compete against Google's Gemini or if Oracle is forced to dilute shareholders through equity financing, the stock's decline may continue [3] Group 2: OpenAI's Potential Solutions - To reverse Oracle's downturn, three key developments are necessary: securing capital injection, launching GPT-6, and achieving real revenue generation from enterprise AI projects [4][6] - OpenAI is reportedly seeking to raise $100 billion at an $830 billion valuation, which could alleviate counterparty risk for Oracle if successful [6] - The launch of GPT-6 in Q1 2026 is seen as critical to dispelling doubts about Google's competitive edge [6] Group 3: Oracle's Financial Strategy and Risks - Oracle is perceived to be walking a tightrope, with concerns that its support for OpenAI's computing needs could downgrade its credit rating to "junk" status [5] - The company's strategy includes financial engineering to manage significant funding pressures, including potential "off-balance-sheet" financing [8][14] - Oracle's net debt to EBITDA ratio is projected to reach 4.0 times by 2027, raising alarms about its ability to maintain an investment-grade rating [14] Group 4: Project Highlights and Revenue Potential - The Abilene project in Texas is identified as a key positive aspect, with the potential to disrupt bearish narratives if it is delivered on time and OpenAI makes timely payments [10][11] - As of November, 96,000 GB200 GPUs have been delivered, indicating that the project is progressing faster than expected [14] - The Abilene project is expected to contribute approximately $8.3 billion in annual revenue, significantly boosting Oracle's cloud infrastructure growth [14] Group 5: Valuation and Market Position - Oracle's current stock price of around $195 reflects a high level of pessimism, incorporating fears of OpenAI's collapse and financing difficulties [13] - Any alleviation of these risks, such as OpenAI securing funding, could trigger a sharp valuation recovery [13] - Compared to Microsoft, which faces similar risks with OpenAI but trades at a higher FY30 P/E ratio of 18 times, Oracle's valuation appears discounted [14]