Oracle’s latest earnings miss has intensified scrutiny around its ability to finance massive AI-related commitments, with analysts pointing to uncertainty over capital needs, data-centre timelines and margin impact. Investor sentiment has become more cautious as the company navigates rising costs and questions over the sustainability of large-scale cloud deals.
BNN Bloomberg spoke with Rishi Jaluria, software managing director at RBC Capital Markets, about what is driving the skepticism, how financing constraints may affect Oracle’s growth path, and what catalysts could shape the stock’s trajectory in the months ahead.
Key Takeaways
- Oracle’s second-quarter results disappointed investors, adding pressure to a stock already under scrutiny over AI-related spending.
- Analysts say financing massive AI and cloud commitments has become the central concern overshadowing Oracle’s top-line metrics.
- Heavy capital needs, negative free cash flow and leverage levels are fuelling doubts about how quickly Oracle can scale new data centres.
- Supply constraints, power challenges and data-centre logistics pose additional risks to Oracle’s ability to meet its AI timelines.
- Investor sentiment now hinges on clarity around financing, OpenAI-related demand and when AI revenue will translate into margin gains.
Read the full transcript below:
ROGER: Oracle is down in pre-market trading this morning, extending yesterday’s losses after the firm reported disappointing second-quarter earnings. Here to unpack the numbers is Rishi Jaluria, software managing director at RBC Capital Markets. Rishi, thank you very much for joining us.
RISHI: Thank you for having me.
ROGER: What was the most concerning number for you on this?
RISHI: I don’t think there’s one specific number. We can point to OCI, we can point to some of the top-line metrics. But really, I think it’s more the qualitative that was the issue here, not the quantitative. It comes down to these large contracts, these large RPO numbers, and this US$300-billion deal with OpenAI. How are you going to pay for this? And while management definitely sounded confident and talked about their ability to raise capital while still maintaining their investment-grade rating, I think there’s greater skepticism. Heading into earnings, I think investors were looking for more colour on what the plans were and what the alternative financing arrangements could be — whether that’s SPVs, like you’ve seen Meta do, or even working with sovereign wealth funds. You have to think a little outside the box. But I do believe there are still concerns over how Oracle will be able to meet this demand in the timeframe they’ve laid out, and whether there’s a risk to those numbers out to 2030.
ROGER: Kash, you have a question?
KASH: There we go. Sorry — when you look at the stock now, do you believe that’s priced in? Or do you think there’s still another leg down before we start to see some of the good news play out?
RISHI: I think the stock is going to remain a bit of a battleground stock and a little volatile, but candidly, I think the stock is probably roughly where it should be trading given all the uncertainty. If we start to get a higher level of certainty over the capital coming through, or we start to see more positive headlines around OpenAI and its ability to continue growing into this commitment number, that could help Oracle’s stock. But it really comes down to these data centres coming online, that revenue materializing and the margin impact emerging. That certainty is what could get the stock to work. On the flip side, if there are delays or worrying headlines around OpenAI — obviously with Gemini 3 over the past couple of weeks dominating headlines — more OpenAI-exposed names could see some downside. It feels like there’s a good amount of upside and downside. That’s why I’m remaining sector performer on the name: it could go either way in a big way, but I think the risk–reward trade-off is pretty balanced.
ROGER: And what could be some of the delays? What might lead to issues?
RISHI: Number one is financing — that’s probably the biggest one and why there was so much focus on that question on the call. But lots of other things could happen: supply constraints, whether that’s GPUs — and you saw Oracle selling its interest in Ampere, which is supposed to be on the chip-designing side — power constraints, liquid cooling challenges, data-centre leasing issues. A lot can happen to delay the timelines. But financing is the big one we’re all watching, including headlines around their ability to raise debt and what the credit spreads look like.
ROGER: And do you think the appetite is out there to get involved with them when it comes to raising that debt?
RISHI: I think there is appetite, but given that this AI capex trade — especially on the OpenAI side — has cooled down over the past couple of weeks, I think it will come at a higher price. And that’s showing up in the numbers: a higher cost of capital than maybe what was expected after they reported that big Q1 earnings report that pushed the stock up 40 per cent in a day. The stock is down, by my math, around US$130–$140 billion since before reporting that number. But yes, I think they’ll be able to meet these commitments. I think there’s still demand for investing in AI capex projects, but the higher cost reflects lower certainty relative to before.
ROGER: So you still think there are good opportunities to be had here?
RISHI: I think there are good opportunities in the AI ecosystem. I’m a big believer in AI — I’m a mega bull on this trend. I’m personally a bigger believer in buying Microsoft over Oracle at these levels because Microsoft has so many ways it can benefit from AI throughout the stack — not just the infrastructure layer, but developer, data, application security and more.
ROGER: And what’s giving you confidence in that? Why are you so confident?
RISHI: Maybe twofold. Number one, I feel very confident about AI as a megatrend. I live in San Francisco — I’m surrounded by this day in and day out. I’m actually in New York right now attending the AI Summit. I’m seeing accelerating interest in AI and evolving use cases. I think 2026 could be the year we really start to see it move from proof of concept to pilot to production. As it pertains to Microsoft, two things stand out: one, I’m seeing a lot of innovation from them, which for a US$4-trillion company is truly impressive. And two, they’re very deliberate about where they invest their capex dollars and their time. Rather than focusing purely on revenue growth, they’re prioritizing durability of benefits — not just training. That’s why I feel more confidence in the durability of Microsoft’s growth over the next 5, 10, 15 years. And we need to think in those timeframes because AI is a decades-long trend, not just the past three years.
ROGER: OK, we’ll have to leave it there. Rishi, thanks very much for joining us.
RISHI: Thank you.
ROGER: Rishi Jaluria is software managing director at RBC Capital Markets.
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This BNN Bloomberg summary and transcript of the Dec. 11, 2025 interview with Rishi Jaluria are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
