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- 💰 Oracle's AI Gold Mine
💰 Oracle's AI Gold Mine
PLUS: Why is Warner Bros. rising?
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Market Performance
S&P 500: 6,584.29 ⬇️ 0.05%
Nasdaq: 22,141.10 ⬆️ 0.44%
Dow Jones: 45,834.22 ⬇️ 0.59%
Oracle’s Inks $300 Billion Contract With OpenAI
Oracle's (ORCL) historic stock surge last week marked the latest chapter in the story of a single private company that's dominated the tech landscape for almost three years: OpenAI.
Oracle's blowout earnings revealed massive cloud computing commitments from the AI startup, including a staggering $300 billion contract over five years starting in 2027.
This OpenAI effect isn't isolated. Oracle, Broadcom, Microsoft, and Nvidia have collectively gained over $4.5 trillion in market capitalization since the launch of ChatGPT in 2022.
Oracle's performance obligations surged 359% to $455 billion, with analysts suggesting that over 90% of this increase came from OpenAI alone.
However, concerns are mounting about the risks associated with this concentration.
As D.A. Davidson analyst Gil Luria notes, "Sam Altman has the gumption to sign very large checks without needing to worry about whether those can ever be cashed."
OpenAI remains a cash-burning startup, despite projecting revenue growth from $10 billion to $125 billion by 2029.
Oracle has a Ziggma score of 53, ranking it in the bottom half percentile for growth and valuation. However, these metrics should improve given the tech giant’s massive order book.
Our Takeaway
Oracle's OpenAI dependency is both its most significant opportunity and greatest risk.
While the massive contracts propel Oracle toward the trillion-dollar club, betting heavily on a single unprofitable customer creates dangerous concentration risk for investors.
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Market Overview 📈
The Nasdaq hit another record high on Friday as investors positioned for expected Fed rate cuts next week.
Consumer sentiment dropped to 55.4 in September, below the expected 58.1, reinforcing dovish expectations from the Fed.
Weekly jobless claims jumped to their highest level since October 2021, while downward job growth revisions confirmed a decelerating labor market.
Futures markets are pricing in a quarter-point rate cut with near certainty for the September 16-17 Fed meeting.
U.S. Bank's Bill Northey expects the Fed to deliver against market expectations, noting they're "reluctant to surprise markets."
The yield curve is shifting as the short end rises while the long end falls, potentially signaling concerns about an economic slowdown.
However, lower rates could turbocharge an already surging stock market, benefiting rate-sensitive small-cap stocks and continuing the AI rally into year-end.
Stock Moves Deciphered 📈
Warner Bros. Discovery (WBD) surged over 29% last Thursday in its best day ever, followed by a 17% gain on Friday.
The rally stems from reports that Paramount Skydance is preparing an acquisition offer for Warner Bros. Discovery.
The potential deal has reinvigorated investor confidence in the struggling media giant, which has faced challenges in the streaming wars and managing its debt.
Tesla (TSLA) climbed 6%, extending recent gains to 12% over the past week despite no major company announcements.
Investors appear to be encouraged that falling interest rates will make vehicle financing more attractive to potential buyers.
The stock momentum reflects broader optimism about the EV market's recovery and Tesla's diversification efforts beyond the automotive sector.
RH (RH) plummeted over 4% after missing Q2 expectations with $2.93 EPS versus $3.20 expected and $899M revenue versus $905M expected.
The company slashed full-year revenue guidance to 9-11% growth from 10-13%, citing $30 million in incremental tariff costs. CEO Gary Friedman warned of "significant inflation" accelerating into 2026.
Headlines You Can't Miss 👀
📈 Micron Technology reaches a record high of $158.28 as the AI boom drives demand for memory storage.
🎢 Six Flags Entertainment jumps 7% on increased attendance and strong 2026 season pass interest.
✈️ Joby Aviation rises 2% after joining White House eVTOL pilot program showcase.
💰 Gemini Space Station soars 40% in Nasdaq debut, valued at $4.4 billion.
📺 Vimeo downgraded to hold by Truist amid pending Bending Spoons acquisition.
✈️ American Airlines gets JPMorgan overweight rating with 54% upside target to $20.
💡 Super Micro Computer surges 6% on Nvidia Blackwell Ultra shipment announcement.
Trending Stocks 📊
Grab Holdings (GRAB), a Southeast Asia-based super-app reached new 52-week high driven by strong earnings report, showcasing robust growth across ride-hailing and financial services segments in recovering regional markets.
Opendoor (OPEN) continues to experience volatility, which reflects investor uncertainty and profit-taking despite a positive long-term outlook for digital real estate.
IonQ (IONQ) surged to a new 52-week high following positive analyst day presentations and strategic acquisition announcements, which boosted confidence in the company's quantum computing commercialization timeline.
What’s Next?
Key Events to Watch 👇
September historically ranks as the worst month for equities, with the S&P 500 averaging 4.2% declines over the past five years.
🏦 Fed Decision: September 16-17 FOMC meeting expected to deliver 25bp rate cut with economic projections
💸 Consumer Data: Retail sales and industrial production reports due next week
🎤 Market Focus: Fed Chair Powell's press conference comments on future rate path
📉 Economic Indicators: Housing starts, building permits, and leading economic indicators
Chart of the Day
Source: Carbon Finance
Meme of the Day
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