Oracle Corp. (ORCL) experienced a significant stock surge, jumping 13% on Monday and over 4% on Tuesday following a new deal with Bloom Energy Corp. (BE) and a broader rally in software stocks. Under this new agreement, Oracle will purchase up to 2.8 gigawatts of fuel cell power—in addition to the 1.2 gigawatts already under contract—to support its data centers and AI infrastructure.
The deal includes a warrant allowing Oracle to acquire 3.53 million shares of Bloom Energy at $113.28 each, totaling approximately $400 million. Despite this upward momentum, Oracle is grappling with financial pressures, carrying $120 billion in net debt and lease liabilities, and experiencing negative free cash flow for the first time since 1990. The high costs linked with its AI infrastructure initiatives raise concerns about the sustainability of its financial strategy.
While 40 of the 50 Wall Street analysts rate Oracle a “Buy,” there are significant risks attached to its heavy reliance on AI and a contracted backlog heavily concentrated with a single customer, OpenAI. Should OpenAI falter in its growth, Oracle may face mounting lease obligations without sufficient demand.
