Good for raids! Just now, it went straight up! U.S. technology giants won blockbuster orders
Jin Qilin analyst research report , authoritative, professional, timely and comprehensive, helping you tap potential theme opportunities! Blockbuster orders “save” Oracle. On July 24, in pre-market trading on the U.S. stock market, the stock price of Oracle, the veteran U.S. technology giant, rose sharply, once soaring by more than 3%. On the news, the U.S. Department of Defense announced the signing of a blockbuster contract worth approximately US$7 billion (approximately RMB 47.4 billion) with Oracle. Prior to this, Oracle's stock price continued to decline, once hitting a 52-week low on Thursday, with a cumulative decline of more than 37% during the year. Some analysts pointed out that investors' concerns about the return cycle of AI (artificial intelligence) investment have continued to rise recently, which has combined with the overall pressure on large U.S. technology stocks, making Oracle face a more stringent pricing environment. Oracle wins blockbuster order On the afternoon of July 24th, Beijing time, in pre-market trading on U.S. stocks, Oracle's stock price soared, once soaring by more than 3%. As of 16:30, the increase was 2.72%. On the news, the U.S. Department of Defense previously announced that it had signed an enterprise-level software agreement with Oracle for a maximum period of 10 years and a total value of nearly US$7 billion. The contract, known as the Enterprise Software Agreement, was negotiated by the U.S. Department of the Navy and aims to consolidate into a single contract the disparate locally deployed software licenses from various departments of the U.S. Department of Defense, the U.S. Coast Guard and the intelligence community. The basic term of the agreement is 5 years, with an additional 5-year renewal option, covering permanent and subscription-based software licensing, maintenance and consulting services. "By fundamentally improving the way we procure Oracle's field-deployed capabilities, we have saved taxpayers at least $441 million while serving the warfighter quickly and efficiently," said Kirsten Davis, chief information officer for the U.S. Department of Defense. The agreement with Oracle is the latest move led by Davis to reduce the Department of Defense’s repetitive software spending and promote enterprise-level unified procurement. Looking back, in May this year, his office reached a similar five-year agreement with Microsoft worth $9.69 billion to consolidate the scattered Microsoft and other enterprise software licenses of various military services and intelligence agencies into a single contract to end years of fragmented procurement models. Some analysts pointed out that this large order also brought important government business endorsement to Oracle. Oracle co-founder Larry Ellison has a close relationship with U.S. President Trump and has donated $45 million to non-profit organizations supporting Trump's 2024 campaign. During Trump's second term, Ellison became one of the first guests to visit the White House and announced the "Stargate" artificial intelligence (AI) data center plan. In May this year, the U.S. Department of Defense announced an agreement with technology companies such as Oracle to deploy AI on classified networks. Despite winning a big deal from the U.S. Department of Defense, Oracle's stock price is still under tremendous pressure. On July 23, Eastern Time, Oracle closed down 4.61% to US$120 per share. The cumulative decline during the year exceeded 37%, hitting the lowest price in the past 12 months. As a veteran technology giant, Oracle is betting heavily on the demand for AI training and inference infrastructure, and is vigorously transforming from traditional enterprise software to cloud infrastructure OCI (Oracle Cloud Infrastructure) and AI. Company management has highlighted OCI's differentiated advantage in AI training workloads in recent earnings calls, as well as new contracts from AI startups and large enterprise customers. Oracle is continuing to expand its capital expenditures - investments in servers, GPU clusters, data center construction, etc. are constantly rising, and the company has been saddled with tens of billions of dollars in debt. The core question that the market is currently concerned about is: whether Oracle's cloud infrastructure's high-growth narrative can continue to be realized, and when the huge investment in AI infrastructure can be converted into meaningful profit contributions. Concerns surrounding Oracle's credit standing have intensified recently. Standard & Poor's downgraded the company's credit rating to BBB-, which is only one rating notch higher than junk level, on the grounds that there is still great uncertainty about the company's profit prospects against the background of huge investments in the AI field. An Oracle spokesperson previously said in a statement that the company is "rapidly advancing" on the construction of AI sites and is "confident in the return on capital deployed."
According to previously disclosed financial reports, in fiscal year 2026 (June 1, 2025 - May 31, 2026), Oracle's operating cash flow was US$32 billion, but capital expenditures were as high as US$55.7 billion, and free cash flow dropped to negative US$23.7 billion. S&P expects Oracle's operating activities to consume approximately US$42 billion in cash in fiscal 2027, higher than the previous forecast of US$24 billion. S&P stated that Oracle's AI business requires substantial upfront investment and long-term data center lease commitments. Although the current demand for AI services is strong, industry competition is fierce, and other technology companies investing in the AI field have stronger financing capabilities. Recently, the U.S. stock market’s doubts about the return rate on AI capital expenditures of large technology companies have increased significantly. Google's latest financial report shows that AI-related infrastructure spending is still accelerating, causing the company's free cash flow to turn negative, causing the stock price to plummet by more than 7% in a single day, and the total market value to evaporate by approximately US$300 billion.
According to previously disclosed financial reports, in fiscal year 2026 (June 1, 2025 - May 31, 2026), Oracle's operating cash flow was US$32 billion, but capital expenditures were as high as US$55.7 billion, and free cash flow dropped to negative US$23.7 billion. S&P expects Oracle's operating activities to consume approximately US$42 billion in cash in fiscal 2027, higher than the previous forecast of US$24 billion. S&P stated that Oracle's AI business requires substantial upfront investment and long-term data center lease commitments. Although the current demand for AI services is strong, industry competition is fierce, and other technology companies investing in the AI field have stronger financing capabilities. Recently, the U.S. stock market’s doubts about the return rate on AI capital expenditures of large technology companies have increased significantly. Google's latest financial report shows that AI-related infrastructure spending is still accelerating, causing the company's free cash flow to turn negative, causing the stock price to plummet by more than 7% in a single day, and the total market value to evaporate by approximately US$300 billion.