Oracle's recent sell-off due to construction delays and debt concerns is exaggerated; the stock is poised for a technical bounce.

We've got credit default swaps skyrocketing well past 2008 levels for Oracle. And today Oracle is in the news for sending a force majour notice to stack infrastructure which is the blue owl developer for project Jupiter in New Mexico.

Apparently, the problem is their natural gas pipeline that they need to fuel their blue uh or bloom energy fuel cells is delayed yet again. And so this is leading the stock to sell off and leading once again to renewed fears about the artificial intelligence concentration of economic power so to speak.

More on Oracle in just a moment, which is down 6%, was down as much as 7%. So, slightly recovering now, but losing some of the lines.

So naturally, when you get reporting like this right here that Oracle sites forced Majour to shield itself from a controversial data center, people start getting nervous, especially because Oracle's not exactly the richest company when it comes to uh their cash flow or their balance sheet.

Their cash flow in the last three months alone, this is just a threemonth cash flow statement. They brought in revenue or they brought in cash flow of $23 billion. And they decided to spend not just all of it, but another $5 billion on top of that.

5.4 almost $5.5 billion more than they actually brought in. So, they're raising money. They raised $20 billion. Their balance sheet has gotten better, but it's still not great.

They finally have more cash at $36 billion than they have bills to pay at $33 billion. But you got another $147 billion of debt plus another 30 in leases. They're still raising money.

They're still spending more money than they make.

Like, if you're long the data center buildout and you're long Nvidia and AMD and Oracle and Meta and Microsoft, whatever, maybe you hedge the potential collapse of the AI bubble by buying these credit default swaps.

First, lots of debt at Oracle. We know that. We saw the balance sheet. But the second thing is some of their bonds related to these obligations are now trading at a discount. Uh these bonds related to this Juniper or sorry, not Juniper, related to the Jupiter site, which the coordinates point to right over here in New Mexico...

But let's be real, the bonds right now are trading for a discount of about 11%. Uh there was some reporting that they might get as low as 80 cents on the dollar where investors in these bonds are saying, "Look, I don't know that I'm ever going to get any kind of yield on this data center because of these delays, and so I'll just dump now. give me 80 cents on the dollar.

I want out. I'm panicking. Whatever. And uh and and and that's why you get these bonds selling for a discount.

This sort of Oracle bad news about delays to their pipeline because of New Mexico happens at the same time as Texas is saying, "Hey, we're freezing all permitting for new data centers."

Now, regarding this Oracle piece, the uh Oracle piece is trying Oh, it's 1.8 million homes. I think I said one and a half, but anyway, the Oracle piece uh trading, you know, below 90 cents on the dollar now for these bonds.

This is all part of the Stargate project, $400 billion Stargate project. They're expected to use Bloom Energy products, but again, they can't get the pipeline installed because New Mexico just delayed the route for that pipeline by 6 months.

And so that sucks. Construction as of early September is about 26% complete. And there are 3,500 workers on the site, which is a lot.

I do think that some of this drama uh around Oracle is overblown. So, you know, we we lost my 139 line here. I actually think this 139 line is pretty critical. I don't have any Oracle stock.

Uh I'm not trying to sell you Oracle stock or whatever. I don't care.

But anyway, uh you know, to me, Oracle has now we're basically at our fourth potential bounce over here on the 139 line. I think the 139 line represents a bottom. I do recognize that we have fallen below that right now on this this fear, uncertainty, and doubt around this, but I think it's mostly a nothing burger of news.

So, you've got a nice bounce right here that we had on Octo August 19th, beginning of September, uh middle of September right here on Fed rate hike day. uh and then again now. So I think this is a little overblown.

Uh I'm not I'm not bearish this at all. I think you know just because there's a delay in a permit doesn't really change the fact that the AI data center A is happening and B needs to happen.

It's just common. This is just part of the normal BS that goes on in construction. And uh uh I I'm not bearish that.

This facility is expected to come on in 2028 and uh you know it could end up getting delayed later in 2028 or 2029 now which is interesting because in 2029 there's talk about Apple coming out with their data center products.

So, it's just going to take marketing effort and patience to get there. I don't see any of this though as existential to the AI trade.

Uh so you know the article makes a really good point that this spending by Alphabet, Amazon, Meta, Microsoft, Oracle, your big spenders here, they're going to spend trillions of dollars of on AI and there's really no end in sight.

They're expected to spend $4.2 trillion between now and the end of 2029.

The bubble's about to blow. Oh my gosh, Oracle's declaring force majour. They're going bankrupt. The sky is falling. No, this is a classic permitting delay, which you'd almost expect anyway.

Oracle is just protecting themselves as much as they can from having to pay those bills starting in 2028 by giving really early notice that, hey, we're kind of getting screwed over here by New Mexico.

Still got 3,500 workers on site, still working on it, whatever.