TMTB Morning Wrap

Good morning. Futures down 55bps early as it looks the past two days might have just been a warm up for today. Some AI Tech spec names down heavy in premarket OKLO -15%; BE -7%; RGTI -5%…you get the idea. ALAB -7%. Other areas of risk like BTC dn 2% while non-profitable tech underperforming in the pre-market. ORCL neg initiation by Redburn/Roth adding some fuel to the fire as the near-term AI trade looks to continue to digest. Some interesting news tidbits about OAI getting more into Ads and e-comm (see below).

Let’s get to it…

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ORCL: Redburn Initiates Oracle at Sell, Sees $175 Price Target and calls ORCL “Balance-Sheet as a Service”

Key quote: “Its role in single-tenant, large-scale deployments is closer to that of a financier than a cloud provider”

Redburn started coverage on Oracle with a Sell rating and $175 target, warning that the market is overvaluing the company’s contracted cloud revenues. The firm says Oracle’s five-year OCI outlook, at roughly $60B in value, is already priced for an aggressive “blue-sky” scenario that looks unlikely. Redburn notes subdued non-IaaS growth and heavy fixed-cost pressures add to downside risks, while economics tied to OpenAI are largely fixed and benefit OpenAI more than Oracle. The report also points out that Oracle’s push into Generative AI is still more narrative than reality, requiring customers to be on its cloud and demanding major R&D spending. Overall, the firm argues that Oracle’s long-term lease obligations could become a mismatch if OpenAI scales vertically, making the stock vulnerable despite near-term hype.

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IBM +3%: HSBC Says Quantum Computing Trial Beat Wall Street Rivals

Quantum news stories continue to heat up…