Yeah we’re making more money but we’re gonna have less cash at the end of it dw about it.

Why is this happening?

TLDR: Oracle is spending billions on its AI infra buildout, to satisfy its insane deal with OpenAI. This means HUGE capex investment upfront, assets which the company will depreciate over multiple years. Hence, free cash flow goes down in the early years (‘26 and ‘27), but accounting net profit goes up, per GAAP.

Whether this makes sense or not, and whether these investments will pay off is essentially the crux of the debate in markets right now.

This chart is basically a Rorschach test on whether you think we’re in an AI bubble or not.

Source: Bloomberg
Tool: Excel

Posted by chartr

7 comments

  2. For those who don’t live in the finance world, profit and cash flow are not the same thing. Companies with huge capex requirements, or those that are experiencing tremendous growth, always have cash flow issues.

    Not surprising that a software company generally doesn’t have huge capex requirements, but now with the advent of AI and the requirement for huge infrastructure to support the energy needs, that’s no longer the case.

  3. “Whether this makes sense or not, and whether these investments will pay off is essentially the crux of the debate in markets right now”

    My bet is on no, but that most of the CEO’s of these respective companies don’t really care much. if they crash the economy and their companies, they just get to retire to some mansion in whatever part of the world they want with their billions of dollars.

  5. Reddit: capitalism is broken. Businesses do not invest anymore. They only care about short term profits.

    Reddit: why are companies spending all this money? This is very broken. What of these investments are not profitable?

  6. This is how it looks like when a company is making a huge investment

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