Renowned investor Michael Burry, famously portrayed in the film The Big Short, has taken an audacious stance against Oracle Corporation ($ORCL). Through put options and directly shorting the stock, Burry recently disclosed his bearish position on Oracle’s cloud-driven ambitions. This revelation adds to his notable track record of challenging market trends, particularly in the artificial intelligence (AI) sector.
Oracle Stock Performance: A Tale of Volatility
Oracle’s 2024 journey was marked by extreme highs and lows. The stock surged 36% in a single September session, fueled by optimistic predictions of soaring demand for its AI-enabled cloud solutions. However, these gains dissipated as concerns over capital expenditure, questionable deal structures, and a $95 billion debt burden became central themes for investors. By the year’s end, the stock had erased most of its gains, closing approximately 40% below its September peak.
Michael Burry’s Perspective
Burry questioned Oracle’s aggressive expansion into cloud computing, citing the significant debt load stemming from data center expansions as a red flag. In his own words, he described the strategy as “unnecessary” and attributed it to potential ego-driven decisions at Oracle’s executive level.
Rather than targeting diversified tech powerhouses like Meta (Meta), Alphabet (GOOGL), or Microsoft (MSFT)—firms with resilient core businesses—Burry prefers Oracle as a short candidate. “These companies have strong foundations and are not solely reliant on AI,” Burry elaborated. Conversely, Oracle’s success hinges on its cloud strategy, a riskier bet given the immense financial commitments.
The Bigger Picture of AI Skepticism
Burry’s bearish stance on Oracle aligns with his broader skepticism about AI-oriented businesses. Previously, he disclosed short positions on Nvidia ($NVDA) and Palantir ($PLTR), two giants riding the AI wave. He views Nvidia as the “most loved and least doubted” AI stock but suggests its valuation represents an overzealous market.
His lukewarm belief in AI economics reflects broader concerns about its sustainability. “AI alone cannot be the backbone of a company without diverse and profitable operations,” Burry remarked. For Oracle, this translates into an unsustainable reliance on AI-cloud narratives.
Investor Takeaway
Oracle’s $95 billion debt, stemming from data center buildouts, and its overall reliance on cloud ambitions make it a key focal point for bearish investors like Burry. Should debt concerns continue to weigh down growth potential, Oracle may face more scrutiny from the market.
For those keeping tabs on notable market events, Burry’s predictions and investment choices often serve as salient indicators. However, whether Oracle can consolidate its ambitions into sustainable growth remains a story investors will monitor keenly.
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