Jim Cramer on Oracle: "Their Balance Sheet's Not That Good"

Oracle Corporation (NYSE:ORCL) is one of the stocks Jim Cramer talked about recently. Cramer noted that the company has a “huge amount of debt” and remarked:

“But how about the rest of tech? The data center, the hyperscalers, the proprietary semis, the ones we loved for so long, what happens to those?… The answer can arguably be found in the greatest movie of all time. The answer can be found in The Godfather… There’s something lurking here that could end the war and allow these stocks to come back to life, and it’s called discipline. In September, Oracle raised $18 billion in bond market, okay? Their bond issuance has drawn scrutiny in the form of aggressive buying of credit default swaps.

What does that mean? It’s basically insurance that pays off if the company defaults on its obligations… except you don’t need to be a bondholder to buy these insurance policies. These people are betting against Oracle itself because of the stupid amount of money that it’s spending. Oracle already has a huge amount of debt. Their balance sheet’s not that good. At some point, they’ll heed the warning of the bond market and slow things down, or else. And they don’t want the or else. These data centers cost a fortune, and even the best builder stumbles… Oracle can’t risk blowing up its balance sheet for Sam Altman. That’s when and how we’re going to get out of this morass. Oracle blinks… Oracle shows discipline, and it must because the bond market is a cruel task master.”

Oracle Corporation (NYSE:ORCL) provides cloud and on-premise software, databases, and IT infrastructure to help businesses manage operations. The company also offers hardware, consulting, and support services.

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Disclosure: None. This article is originally published at Insider Monkey.