SpaceX's AI Ambitions Face Massive Capex Risk, Oppenheimer Says

Oracle Corporation reported on September 10 that its revenue rose 30% in the fiscal first quarter, driven by a 121% jump in cloud infrastructure revenue, the business that rents computing power to AI companies. The company said its remaining performance obligations, the value of contracts signed but not yet delivered, reached $664 billion, more than seven times the revenue it expects this year, and on the back of that backlog Oracle raised its full-year revenue outlook to at least $90 billion. Roughly half of the backlog should turn into revenue within three years, more than three times what the company expects to collect in the whole of this year, and Oracle signed more than $30 billion of new AI cloud deals in the quarter, most structured as prepayments or customers bringing their own hardware. Delivering that backlog is costly: Oracle spent $28.5 billion on data centers and equipment in a single quarter, more than the cash its business generated, free cash flow stayed negative, gross margin fell more than five points to 61%, and a day after the results the company expanded its job-cut plan. Concentration risk looms as well, since a $300 billion contract with OpenAI signed last year begins in 2027 and is close to half of the current backlog, while OpenAI is still losing money. Management has pointed to an investor day in October for a fuller plan on margins and cash flow ahead of the next quarterly report in December.

CoreWeave said on September 17 that it has continued signing customers at higher prices since June 30, with third-quarter contracts running just three to six months yet pricing out around $40 million of annualized revenue per megawatt of power. The revenue backlog stood at about $104 billion on June 30, excluding more than $25 billion in fresh commitments added early in the third quarter, while contracted power rose to about 4.2 gigawatts by the August 11 earnings call from about 3.7 gigawatts on June 30. Second-quarter revenue of $2,575 million more than doubled from $1,212 million a year earlier, and the customer base is widening with enterprises such as Caterpillar and Bentley Systems joining AI labs. Higher prices have not yet reached the bottom line: operating income swung to a loss of $49 million from a $19 million profit a year earlier, adjusted operating margin fell to 5% from 16%, net interest expense of $640 million more than doubled, and the net loss widened to $626 million from $290 million. Hedge fund ownership rose to 71 funds from 63 in the prior quarter, even as 17.84% of the float is sold short.

Cerebras Systems announced on September 1 a new AI data center in Mikkeli, Finland, built with partner Compute Nordic Finland, that will grow in stages to 165 MW of contracted capacity, with construction on the first 50 MW already under way. The deal runs through a series of service orders, each with a seven-year term, stepping up from 50 MW to 80 MW and eventually 165 MW, and an independent study dated September 12, 2025 put the eventual regional investment at €1.0 billion to €1.7 billion. Cerebras reported on August 12 that cloud revenue for the quarter ended June 30 rose 281% from a year earlier, with $25.4 billion in customer obligations still to be delivered, while core gross margin reached 41%, roughly 940 basis points above a year earlier. On a GAAP basis, second-quarter gross margin was 14% and operating margin was negative 265%, and even the core measure that strips out stock compensation, warrant amortization and pass-through data center costs showed an operating margin of negative 16%. For the third quarter, Cerebras guided to core operating margin between negative 25% and negative 23% on core revenue of $214 million to $216 million, while hedge fund ownership rose from zero funds to 78 and short interest sits at 11.88% of the float.