Fed Meeting Looms Large for Oracle and Amazon's AI Ambitions
Oracle and Amazon are facing significant financial challenges as they invest heavily in AI datacenters. Despite posting record cloud backlogs, both companies have seen their free cash flow turn negative. Oracle's Q4 revenue reached $19.18 billion with EPS of $2.11, while OCI grew 93% year over year. However, the company plans to raise around $40 billion in debt and equity in FY2027 to fund a $70 billion capex outlay. Amazon's AWS grew 37% to $42.23 billion, its fastest pace in 18 quarters, but Q2 capex alone reached $54.2 billion, up nearly 68% year over year.
The upcoming Fed meeting this month is causing concern for both companies as a single decision could determine the fate of their trillion-dollar AI buildouts. Oracle's CFO Brian Olsavsky acknowledged that Amazon has 'issued debt this year' and is weighing options, while Oracle's balance sheet already carries $218.7 billion in total liabilities.
A dovish Fed pivot would ease Oracle's funding math dramatically, but a hawkish surprise could force Larry Ellison's team to lean harder on equity issuance, diluting shareholders. Amazon, with its diversified cash flow and built-in shock absorber, is seen as more insulated against rate increases.