Oracle Drops Back Down To Earth… And State Of the Consumer Ahead Of Holidays 11/12/25

0:02Live from the Nasdaq market site in the heart of New York City's Times Square, this is Fast Breakout. Financial stocks at all time are multi-year highs as their CEOs head to the White House. And the gains keep coming. Plus, Cisco on the move after earnings. Sneaker maker on holdings sprints higher and charting the course on Disney, where the entertainment giant is heading as it gets ready to report tomorrow morning. I'm Willis D 'Li, coming to you live from the studio, be at the NASDAQ. On the desk tonight, Carter Worth, Karen Feinerman, Guy Adami, whose phone just rang. And Julie Beal. Ironic, since he's always the one who says phones off.

0:47But we start off with what may be the shattering of Oracle's crystal ball, the one-time AI data center darling falling another 4 % today, now trading at more than two-month lows. It's more than a race that 35 % post-earnings popped from September and is now pacing for a fifth straight week of losses. The move coming as investors seem to be increasingly questioning the pace and magnitude of the AI boom. mega cap names like Meta, Amazon, and Alphabet all taking an outsized hit today, while Palantir, one of the best performing stocks of the year, dropped 3.5%. So what should we be taking from this pullback, Oracles in particular?

1:25We've been talking about it for a while, but I guess the bigger question is, is this decline a cautionary tale for the rest of the space? I believe it is. If Dan were here, Dan's been talking about it for a while. I think collectively we've been talking about, you know, it's a cash flow problem at a certain point. And you have to wonder now, Michael Burry's been writing about it as well. And I went back and looked at all the Twitters and the videos back in September 10th, September 11th. And people were tripping over themselves to say how bullish it was for Oracle and how this would be the next trillion and a half, two trillion dollar company.

1:53And we sort of looked at each other and said, you know what? There's a lot to be gleaned from this in terms of what's the earnings going to be on the back of the revenue that they're talking about. Now you're talking about a cash flow problem. We've retraced the entire thing, as you said. this is the September low, and it remains to be seen if the stock can bounce from here. This is a logical place for it to bounce, but the bloom is off the rose here, Mills. They have increased their debt by$38 billion since September alone. I mean, that is a massive build, and it's still coming. I mean, the whole space, they've already pledged that they're going to increase spending next year.

2:28That is going to be funded by debt primarily. Yeah, so they don't have the cash flow problem at the moment. That's not where they are. But, you know, when they talked about that enormous backlog build, the margins on that backlog were much smaller. And now we have, they're likely to have higher interest expense, right, for two reasons. One, just the magnitude of how much debt they want to sell and others as well so that market could get saturated. And then some concerns about, okay, well, what is the promise of this data center return? and so do we debt holders need more interest? Right. So you can see how you get into this sort of negative spiral there.

3:11It is, I don't know how much of it to make is just a little bit of like a frenzy right now. My gut is that it's more structural than that. It is a bigger problem. Even while we're talking about this just today, right, we saw huge deals. It's almost like a race to just get your headline number out there. I don't know if that's to get a position in line for debt. I'm not quite sure what that is. But when you look at Meta's response, the stock's response to that build, that's, as a shareholder, very, very frustrating. I think if they were, you know, if we were to see the year of efficiency next year, I know that's not Mark Zuckerberg's plan at all.

3:52Right. But that would be very nice for the stock. 2.0 would be probably pretty good. What does that chart look like, Oracle, the decline? I mean, we can talk about the chart for a second, but I think the real thing is if one were sitting there and they were just graduating with their Ph.D. in finance and had to present themselves in front of the committee and the committee said, well, you've made an analysis on Oracle. And they said, yes, did you use a dividend discount model? Did you use enterprise value EBITDA? Did you price the sales? Some of the parts. How does anyone, anyone explain, myself included, how a stock can go from$250 to$350 back to$250 in a matter of weeks?

4:25is anything changed? The debt's not new. The story's not new. Just because it's in the news, there might be some issue with margins. They're overstating this. But this speaks to the vagaries of markets. These are risk assets. Now the question is, but here, and to your question, do you buy this 35 % sell-off? My hunch is that just as it was in favor, now it's so almost out of favor that I think you can play it for a bounce. Oh, so bad it's good in this case. Well, it's an extreme move. You've retraced the whole thing. And again, that's a trading judgment. I can't speak to it, and I would never want to because clearly no one else can, what this thing's worth, right?

5:00No one has a clue. Yeah. Julie, what's your take on this? And if we can put up the chart that shows the decline in valuations. I mean, Oracle's valuation is down 30 % from its peak of 45 times. It's 32 right now. I don't know if you think that is worth a play for the bounce, as Carter says. It still feels a little bit rich for me relative to what we can see is that there's just a precipitous decline in the returns on investment that people can expect. Everyone can kind of recognize that Oracle is not the same type of business as a lean software business. What I think really has changed and has impacted all of these players is just this transition away from we're going to fund this with cash flows, which everyone felt fine.

5:42But suddenly when we're talking about debt and we're doing secret debt with special purpose vehicles, like what happened with Meta, I think suddenly that really, really changes the dialogue. And then it gets only a little bit worse when you have OpenAI CFO asking for a backstop on their debt, like asking your dad to co-sign your loan on your first condo. Like that's just not how this works. And I just think that that has really spooked the market because we can all recognize that the minute debt gets involved, that accelerates the declines if they happen. I mean, there have been a couple of major shifts for this sector.

6:16I mean, Julie touched on one of them, and that is funding spend with debt versus cash flow. And the other one is just the model turning from asset light to asset heavy. And how do you account for the depreciation of this build out? I mean, these are major questions, fundamental changes to how we would view these stocks. Yeah, we've talked about that as well. Michael Burry's written about that too. A lot of people We've been talking about it now in terms of what's the right depreciation schedule for this industry sector, whatever you want to call it. Now, they're going from a six to eight year depreciation schedule.

6:46But you go back and look at some of the comments out of some of the CEOs. And quite in my opinion, there should be like an eight to 12 month depreciation schedule if you really look at and examine how quickly things turning now. So that changes the entire narrative in terms of the debt raising. That's one of those things. You know, Karen can speak to this. Nobody cares about this stuff until they begin to care about it, right? It's great on the way up the same way, you know, buying Bitcoin every day and creating the Treasury strategy works. But when things turn, everybody starts pulling the microscope out.

7:15And that's when things get a little dicey. Yeah. We've seen spreads widen. Right. We've seen spreads widen. Right. Exactly. They don't care about it until they care about it. So if you can raise debt for free and a lot of companies could raise debt for free, then you've got a nice, you know, then a lot of models work that wouldn't work otherwise. But then you get into the vicious cycle of debt being more and more expensive and the project being less and less profitable. So that's not a great place to be. I think the Oracle move, I also think it is just a proxy for sentiment about the entire space, whether or not you have anything particular on Oracle or not.

7:54Huge, liquid debt, CDS swaps, there's tons to do. and this is sort of just tells you how the market feels about that much debt. For more on Oracle and the pullback in the AI trade, let's bring in D.A. Davidson, head of technology research, Gil Lauria. Gil, great to have you with us. I know you were listening to our conversation. I mean, in your view, is Oracle some sort of a canary in the coal mine? I mean, is this sort of the cautionary tale that a lot of these other players will fall to in terms of, you know, the optimism fading away, the concern about the debt levels growing, et cetera? It's a cautionary tale in the sense that they represent the bad behavior in the AI build out.

8:30Oracle and CoreWeave are the bad behavior. Microsoft, Amazon, and Google have all the customers, have cash on hand, and have tremendous cash flow. So when they build a data center, it's already sold three years in advance. And they just told us two weeks ago that just Just over the last 90 days, they've seen a positive inflection point in demand for AI from their customers, which is everybody. So that's healthy, responsible investment. The irresponsible investment, as you've been talking about, is when you start borrowing to provide capacity for startups. And that's what Oracle did. Oracle originally told us on their earnings, oh, we just won$300 billion of backlog from several companies.

9:15The next day we found out it was only OpenAI. Then we subsequently found out that OpenAI has committed$1.4 trillion and has no intention of living up to those obligations. It considers it a flexible arrangement that they can consume as much as they want. So they commit$250 to Microsoft and$38 to Amazon and$25 to CoreWeave and they'll spend what they feel like. So we know that it's not real demand. And then we found out that Oracle's margins on this business are so much lower than the core business that we're not sure that we want them to grow this business. They said 30, 40 percent gross margins on this business, if that's a good thing.

9:56Their core business is 80 percent gross margins. This is a bad business with very low margins when you don't have the customers, which they don't. All they can do is resell this capacity back to the people that do have the demand, which is Microsoft, Amazon and Google. So at 227, we've basically done a full round trip in terms of the gains that Oracle made on all the optimism and then fallen back. Are we at a level here that's sort of as stable or should we look at Oracle differently because of the way they manage the message? It's more stable at 32 times earnings than it was at 45 times earnings.

10:35Because let's not forget the core business. Should it be lower because of what they told us, which didn't come to fruition? Yes. Yes. We should definitely keep everything they say from now on with a little more grain of salt just because of how this all transpired. But Oracle itself has a core business that grows 5 percent that is very profitable. It does have a cloud business that's growing. Let's forget about the OpenAI false promises. Their core business in cloud is growing. They have good customers there like ByteDance. They may end up owning a piece of TikTok USA. Those are reasons to get excited about Oracle beyond the core business.

11:15But OpenAI and that$100 a stock in Oracle stock of appreciation, it makes a lot of sense that that's completely gone away now. Yeah, Gil, listen, absolutely. I think you're right there. Cloud business, probably low to mid-margin stuff. So, you know, maybe it's not deserving of the multiple. So how do you back of the envelope do it? You know, I look at this and say eight bucks next year. A 25 multiple is historically probably about right. It gives it to$200 stock. That's where I think the value should be found in Oracle. That's right. When we get back to the 20s or the mid 20s, it could become interesting.

11:51Right now at 32, it's not cheap. It is still getting credit for the cloud business doing better. And again, part of the cloud business is a good business. The part where the traditional hyperscaler business, where they're big customers or companies like Zoom or ByteDance, that's a fine business. It's not as good as the core business, but that's a fine business. The renting out GPU business, if they have a positive margin at all, it's very, very low. GIL, it's Karen. Thanks for being on. What do you think it would take for any of these companies to tap the brakes? I think OpenAI is going to, there's going to be a reckoning around OpenAI, where they have to either commit, make firm commitments to capacity or walk away.

12:36So there's going to be a lot of renegotiating of that 1.4 trillion dollars they've committed to. There's maybe tens of billions of real demand they have over the next couple of years. So they're gonna have to go around to all these companies, Amazon, Microsoft, Oracle and CoreWeave and say this is the actual demand that we can pay for next year based on how much money we've raised. And once we have that, all these companies are gonna have to come back to us and tell us here's how much we have to adjust down our backlog. This is real. And once we know that it's real, we'll have a better sense for what the business is.

13:11But a lot of this has been caused by OpenAI inflating expectations across a broad set of companies. It's not just CoreWeave and Oracle. It's also companies like AMD and Broadcom that where a lot of that valuation has to do with promises from OpenAI. AMD yesterday, their analyst, they talked about these phenomenal growth rates over the next few years. We don't know how much of that is OpenAI committing to volumes there based on now owning 10 % of AMD. Maybe it's the biggest part of growth there, just like it was the biggest part of growth in Oracle. We have to get OpenAI to tell us what they actually have, how much money they've actually raised, how much money they can actually spend next year, and have all these other companies take out their backlog that's not real.

13:59Gil, thank you. Great to see you. Gil Loria, DA Davidson. Let's assume that we're not going to get open AI to reveal all these things, because I think that's a fair bet. Julie Beal, if there's some sort of reckoning, as Gil put it, where in the MAG-7 would you want to be? I think probably I would want to be positioned with Meta. I think Meta is the one that has the best positioning in terms of being able to leverage AI to make their own business singularly great. So I think having that ability to kind of eat your own AI and make your business that much stronger is kind of particularly unique about Meta.

14:37And I think that that positioning is not really reflected in the valuation. All right. Meantime, let's get to shares of IBM. They hit an all-time high today. The company is saying it has built a new experimental quantum computing chip that could clear a path for useful quantum computers by 2029. IBM stock is up more than 43 % this year. Carter, what do you make of this chart? Sort of a steady Eddie, north by northeast, not dynamic or exciting, but it's the definition of a stay long, be long in my world. Just stick with it. I've never heard north by northeast before. That's up and to the right.

15:12Up and to the right. Generally tracking well. What's not to like? I want the Carter Bracksonworth thesaurus. That's fantastic. You know, a couple of things. IBM was the eye in Sandy Canald, who's listening right now, and his squid, the acronym or the anagram, number one. Squid, I think. I'm pretty sure it was squid. Now, he'll come in my ear and say it was swift. Exactly. Number two, look at what this company's done since Gary Cohn became part of it. It's not coincidental that when Gary sort of got himself involved in a company, immersed himself, the stock has done extraordinarily well. Now, loon and nighthawk quantum trade.

15:51I mean, at 26 times, which is not crazy in today's world, I still think there's value here. And we've been steadfast in our love of IBM. All right. Meantime, Boston Fed President Susan Collins just making some comments. Changed expectations, in fact, for a December rate cut. Steve Leesman's got the details here. Hey, Steve. Yeah, with hawkish comments in the last hour by Susan Collins, CBC now counting half of the voting members at the Fed is either outright against or at least cautious about a December rate cut. Collins saying in the last hour that she favors steady rates until inflation is moving meaningfully towards the 2 % target.

16:29Other Fed officials have picked up that kind of language. She says rate cuts risk stalling of inflation's return to the 2 % target, and she's reluctant to cut without more evidence of a weakening labor market. Wants to keep rates steady, quote, for some time. Collins joins KC President Jeff Schmidt, who's likely against the December cut, having dissented at the last meeting, though he hasn't spoken since the end of October. Presidents Goolsbee and Musalm and Governors Jefferson and Cook have all suggested going slowly or cautiously when it comes to future cuts. Governors Myron, Bowman and Waller, they're all presumed to favor a cut, perhaps along with New York Fed President John Williams, though he's less certain than Fed Chair Powell, I'm counting as an unknown at this point.

17:09Now, before Collins spoke, markets had a 64 % probability on December rate cut. That's now fallen to 58%, though there's still a 76 % probability that that cut happens by January. So what would it take for this December cut to happen? Well, likely clear data on a weakening job market or economy and stable or declining inflation data, either from the official data, which hopefully is coming soon, or the alternative data that markets have been following. Melissa? In terms of the real data, we heard from the White House today that the October data will never be released. And so I'm wondering with the government shutdown, if we would even get the next month's data, considering the fieldwork hasn't been done during the shutdown.

17:53So we're pretty sure they can do the November employment report, at least the establishment side of the survey. The household survey, they'll have to hustle up to get done. I think they're a week late on that. The CPI data, I believe they collect, I think, all month long. So they could probably get together at least something resembling it, maybe with additional imputed data. It is interesting, perhaps ironic, maybe it's significant. The CPI report for November, if it does come out in December, will come out on day two of the Fed meeting. That's an interesting setup. Steve, thank you. Steve Leisman.

18:37Does this matter to the markets at this point? First of all, I still think they're cutting in December. I don't think they should. I think they will, number one. I want to be crystal clear. But if they don't, given what's baked into the market at this point, I don't think that is market-friendly at all. and it's certainly not bond market friendly either. If they don't, though, that would likely mean that the labor market has improved a little bit. That seems to be the dual mandate that they're leaning towards is the labor over inflation, even though it's not a target. They're like, oh, it's heading in the right-ish directions.

19:08If they don't cut, labor's better. But I agree with you. I think they will cut. I think they will. You're right. She always makes great points. I rarely do. But I'll say this. You know, recently over the last couple of weeks, there's been this, not pivot, but this sort of slight pushback towards being concerned about inflation. So both of those things potentially could be true. We'll see. All right. Coming up, earnings season rolls on with Cisco and Flutter both on the move tonight. The numbers out of the quarters next, plus a number of fast movers in today's session. The headlines behind the action in Lilly, Novo, Chipotle and more.

19:40Don't go anywhere. Fast Money is back in two.

19:48Welcome back to Fast Money. Cisco shares popping after hours after the networking company posted better than expected sales and profit in its latest quarter. The conference call is underway. CNBC's Christina Parks and I'll just join us here with more on the numbers. Christina. And more from the conference call. The focus was definitely around AI infrastructure demand, specifically from hyperscalers. The company took in, and this is all new from the call,$1.3 billion in AI infrastructure orders from hyperscalers in the first quarter, which is what we're just talking about, what CEO Chuck Robbins called a significant acceleration in growth.

20:17That's from the same customers they measured last year. So these are new orders. It could be apples to apples, same people that are buying it, or companies, I should say. Four of the major hyperscalers grew triple digits during the quarter as well. Looking ahead, Cisco expects to recognize roughly$3 billion in AI infrastructure revenue from hyperscalers in fiscal year 2026. Remember, last year it was$2 billion. That includes both networking systems as well as optical components. The company also raised its full year guidance with the CFO pointing to strong momentum in orders and that multi-year, multi-billion dollar campus refresh cycle that is just starting to ramp up.

20:54So that should help their guide. The guide, like you said, topped estimates, though. The CFO noted tougher comps in the second half of their fiscal year. Lastly, this just right before the call, before I left the guide, does not include any sovereign AI demand because of, quote, export controls that they're still working through, which should start flowing in the second half of their fiscal year. And don't miss the first on CNBC interview with Cisco's CEO tomorrow at 9 a.m. on Squawk on the street. It's a great read. I mean, it was like there's energy about that. Thanks. In the reading of the prompter.

21:26Well, no, one don't, Vince. I like it. I wrote what I read. Of course you did. I'm not disputing that at all. And I'm sure you don't even need the prompter for that. No, normally I don't. I don't like prompter. I prefer because it sounds more natural. But there's a lot in this call that I wanted to throw. Totally, yeah. She nailed it. Absolutely. You stick around. I mean, stick around because she's spot on. I mean, Cisco, we've been, I think, another old tech night here. IBM, Oracle, Cisco, right? And Carter's talked about Cisco. If Tim were here, he would mention it as well. But at 25 times next year's numbers, it's not unreasonable.

21:59And the second quarter guide was very good. And the operating margins were very good. Good for Cisco. I think it continues to go higher. It's not like the stock ran into the earnings either. Carter, you had a great call. On Tuesday, yeah, we just put out a buy it for a pop in earnings. I think what's so remarkable, of course, and this speaks to the vagaries of all this, it's still, although albeit barely, below its dot-com peak. So that was the 27th of March, the year 2000, hit$82 a share. And here we are in the aftermarket at 79. So 25 years later, it's almost back to onge. Now, of course, that means the justice for inflation.

22:32It's still down 50 percent. But the irony is that it was the most viable company in the world at the time, about$550 billion. It earned about 50 cents a share. And here it is at$300 billion, and it's going to earn, what,$4.50,$5? So certainly cheaper now than it was then. Yeah, that part is amazing. I mean, so it's not expensive. and it's certainly, if you're looking for something sort of tangentially related that doesn't have a big multiple, which is really, it might sound somewhat dumb, but part of the reason why I like Dell, obviously the hardware margins are very different than chip margins, for example, but the multiple is not demanding, as you would say, Guy.

23:13Demanding. Demanding. That's a good word. Wish I thought of it. I think you did. I wasn't making fun of Christina. I enjoyed the inflection in her voice. Stick around tomorrow. Tony Robbins. I want to stick around. It's not Tony. I'm kidding around. It's Chuck, but it's okay. I know. All the Robbins are good. Christina, thank you. Thank you for letting me see you. Parts of Nevelis. Coming up, even more after hours action. She has a fan to apparent flutter on the move. The numbers from that quarter, plus the other stocks that caught our eyes today. You're watching Fast Money Live from the Nasdaq Market Site in Times Square.

23:46Back right after this.