{
  "generatedAt": "2026-10-22T16:04:11Z",
  "url": "https://deepstack.ltd/theses/oracle-rpo-conversion-margin-break/",
  "disclaimer": "Analysis and opinion, not investment advice.",
  "id": "oracle-rpo-conversion-margin-break",
  "number": 35,
  "question": "Will Oracle report, in any fiscal quarter reported between 2026-11-15 and 2027-12-31, a year-over-year decline in total gross margin percentage of 300 basis points or more alongside a capex guidance increase?",
  "dek": "Oracle, the leveraged builder of AI capacity against concentrated counterparties, will show the telecom-builder signature: gross margin compressing through the utilization floor while capex guidance rises and RPO converts slowly.",
  "family": "T07",
  "subthesis": "T07.05",
  "sector": "AI.CLOUD",
  "subsectors": [
    "AI.CLOUD.HYPER",
    "AI.DC.CAMPUS",
    "AI.CLOUD.NEO",
    "AI.FIN.NEOFIN"
  ],
  "relatedParts": [
    4,
    11,
    14
  ],
  "approvedAt": "2026-10-22T01:56:07Z",
  "sectorName": "Hyperscalers, Cloud & Compute Services",
  "api": "https://deepstack.ltd/api/v1/theses/oracle-rpo-conversion-margin-break.json",
  "sides": [
    {
      "id": "yes",
      "label": "Return on invested capital falls",
      "summary": "Debt-funded fixed-cost GPU capacity dedicated to a few capital-markets-funded counterparties, with depreciation and interest accruing on schedule regardless of conversion of RPO into revenue. Gross margin compression during peak demand and sub-WACC incremental returns, with funding needs met by further issuance.",
      "voices": [
        {
          "name": "Daniel Romero",
          "entity": "https://deepstack.ltd/people/daniel-romero/",
          "claim": "No hyperscaler can afford to slow down alone: slowing risks losing power, chips, talent, model partners, customers and the next computing platform while AI threatens their core cash-cow businesses; supply scarcity means capacity secured by one is…",
          "date": "2026-07-28",
          "url": "https://hypertechinvest.com/p/is-ai-a-bubble"
        },
        {
          "name": "Tscsw",
          "entity": null,
          "claim": "When capital deployment accelerates rapidly and concentrates in a narrow set of competitors, the resulting supply glut destroys the profitability of the entire sector. The initial competitive advantage gained through spending is transformed into a…",
          "date": "2025-11-12",
          "url": "https://tscsw.substack.com/p/jp-morgans-7-trillion-ai-warning"
        }
      ]
    },
    {
      "id": "no",
      "label": "The case against it",
      "summary": "AI revenue growth outpacing capex depreciation and amortization, so positive return on investment in AI infrastructure, margin expansion, stock appreciation. Heavy AI-related growth investment rather than maintenance spending, so temporarily depressed ROIC and failed capital-intensity screens, with recovery expected once the investments earn returns. It would show first if oracle gross margin stabilizes or expands as OCI utilization rises.",
      "voices": [
        {
          "name": "Oguz Erkan",
          "entity": "https://deepstack.ltd/people/oguz-erkan/",
          "claim": "Hyperscaler capex turns ROI positive at roughly 1.7-1.8x revenue-to-depreciation ratio with 8% cost of capital, 30% operating margin, and 5-year depreciation. Currently at 1.2x with only 3-4% of global population paying for AI. As paying population…",
          "date": "2026-07-05",
          "url": "https://www.capitalist-letters.com/p/microsoft-undervalued-and-undisruptable"
        }
      ]
    }
  ],
  "tests": [
    {
      "id": "th035-t01",
      "part": null,
      "thesis": 35,
      "slug": "oracle-rpo-conversion-margin-break",
      "when": "November 9, 2026",
      "whenLabel": "Nov 9, 2026",
      "date": "2026-11-09",
      "precision": "day",
      "event": "CoreWeave, purchases of property and equipment as a share of revenue, quarter ended September 30, 2026: whether it comes in at or above 215%.",
      "status": "pending",
      "resultId": null,
      "sameAs": null,
      "stage": "pre",
      "callExpects": "yes",
      "callExpectsBy": "Desk Editor (level A)",
      "callExpectsAt": "2026-10-22T03:45:00Z",
      "callProbability": 70,
      "callProbabilityAt": "2026-10-22T03:45:00Z",
      "callProbabilityHistory": [],
      "source": {
        "kind": "thesis",
        "ref": "tests[0].date",
        "url": null
      },
      "resolver": {
        "kind": "earnings",
        "symbol": "CRWV",
        "rule": "Divide the purchases of property and equipment by the revenue that CoreWeave reports for the quarter ended September 30, 2026 in its 10-Q or 10-K filing on SEC EDGAR. The answer is yes if the ratio is at or above 215.0%; no if it is below 215.0%.",
        "question": "Did the purchases of property and equipment of CoreWeave for the quarter ended September 30, 2026 come to at or above 215.0% of its revenue?",
        "source": {
          "label": "SEC EDGAR, XBRL company facts of CoreWeave (Forms 10-Q and 10-K)",
          "url": "https://data.sec.gov/api/xbrl/companyfacts/CIK0001769628.json"
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        "ambiguity": "If CoreWeave has not filed by November 16, 2026, or a filing restates a period the rule reads, the test is inconclusive, and the Result says what was read and what was missing.",
        "specState": "approved",
        "specVersion": 1,
        "specUpdatedOn": "2026-10-22",
        "specHistory": [
          {
            "version": 1,
            "date": "2026-10-22",
            "reason": "First specification.",
            "by": "Desk Editor (level A)"
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        ],
        "callExpects": "yes",
        "format": "ladder",
        "group": "th035-crwv-capex-intensity",
        "threshold": 215,
        "direction": "above",
        "unit": "%",
        "think": {
          "baseRate": "CoreWeave's purchases of property and equipment as a share of revenue was 249.4% for the quarter ended June 30, 2026, by its filing on SEC EDGAR.",
          "outsideView": "A year earlier, for the quarter ended June 30, 2025, the same line read 202.4%, so the rungs sit on the last print.",
          "wouldChange": "A change in product mix, a one-time charge, or a reclassified line would move the reading."
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      "url": "https://deepstack.ltd/docket/#test-th035-t01",
      "storyUrl": "https://deepstack.ltd/theses/oracle-rpo-conversion-margin-break/#tests",
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    {
      "id": "th035-t02",
      "part": null,
      "thesis": 35,
      "slug": "oracle-rpo-conversion-margin-break",
      "when": "November 9, 2026",
      "whenLabel": "Nov 9, 2026",
      "date": "2026-11-09",
      "precision": "day",
      "event": "CoreWeave, purchases of property and equipment as a share of revenue, quarter ended September 30, 2026: whether it comes in at or above 248%.",
      "status": "pending",
      "resultId": null,
      "sameAs": null,
      "stage": "pre",
      "callExpects": "either",
      "callExpectsBy": "Desk Editor (level A)",
      "callExpectsAt": "2026-10-22T03:45:00Z",
      "callProbability": 50,
      "callProbabilityAt": "2026-10-22T03:45:00Z",
      "callProbabilityHistory": [],
      "source": {
        "kind": "thesis",
        "ref": "tests[1].date",
        "url": null
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      "resolver": {
        "kind": "earnings",
        "symbol": "CRWV",
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        "question": "Did the purchases of property and equipment of CoreWeave for the quarter ended September 30, 2026 come to at or above 248.0% of its revenue?",
        "source": {
          "label": "SEC EDGAR, XBRL company facts of CoreWeave (Forms 10-Q and 10-K)",
          "url": "https://data.sec.gov/api/xbrl/companyfacts/CIK0001769628.json"
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        "ambiguity": "If CoreWeave has not filed by November 16, 2026, or a filing restates a period the rule reads, the test is inconclusive, and the Result says what was read and what was missing.",
        "specState": "approved",
        "specVersion": 1,
        "specUpdatedOn": "2026-10-22",
        "specHistory": [
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            "date": "2026-10-22",
            "reason": "First specification.",
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        "callExpects": "either",
        "format": "ladder",
        "group": "th035-crwv-capex-intensity",
        "threshold": 248,
        "direction": "above",
        "unit": "%",
        "think": {
          "baseRate": "CoreWeave's purchases of property and equipment as a share of revenue was 249.4% for the quarter ended June 30, 2026, by its filing on SEC EDGAR.",
          "outsideView": "A year earlier, for the quarter ended June 30, 2025, the same line read 202.4%, so the rungs sit on the last print.",
          "wouldChange": "A change in product mix, a one-time charge, or a reclassified line would move the reading."
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      "url": "https://deepstack.ltd/docket/#test-th035-t02",
      "storyUrl": "https://deepstack.ltd/theses/oracle-rpo-conversion-margin-break/#tests",
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          "p": 62,
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    {
      "id": "th035-t03",
      "part": null,
      "thesis": 35,
      "slug": "oracle-rpo-conversion-margin-break",
      "when": "November 9, 2026",
      "whenLabel": "Nov 9, 2026",
      "date": "2026-11-09",
      "precision": "day",
      "event": "CoreWeave, purchases of property and equipment as a share of revenue, quarter ended September 30, 2026: whether it comes in at or above 265%.",
      "status": "pending",
      "resultId": null,
      "sameAs": null,
      "stage": "pre",
      "callExpects": "no",
      "callExpectsBy": "Desk Editor (level A)",
      "callExpectsAt": "2026-10-22T03:45:00Z",
      "callProbability": 31,
      "callProbabilityAt": "2026-10-22T03:45:00Z",
      "callProbabilityHistory": [],
      "source": {
        "kind": "thesis",
        "ref": "tests[2].date",
        "url": null
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      "resolver": {
        "kind": "earnings",
        "symbol": "CRWV",
        "rule": "Divide the purchases of property and equipment by the revenue that CoreWeave reports for the quarter ended September 30, 2026 in its 10-Q or 10-K filing on SEC EDGAR. The answer is yes if the ratio is at or above 265.0%; no if it is below 265.0%.",
        "question": "Did the purchases of property and equipment of CoreWeave for the quarter ended September 30, 2026 come to at or above 265.0% of its revenue?",
        "source": {
          "label": "SEC EDGAR, XBRL company facts of CoreWeave (Forms 10-Q and 10-K)",
          "url": "https://data.sec.gov/api/xbrl/companyfacts/CIK0001769628.json"
        },
        "ambiguity": "If CoreWeave has not filed by November 16, 2026, or a filing restates a period the rule reads, the test is inconclusive, and the Result says what was read and what was missing.",
        "specState": "approved",
        "specVersion": 1,
        "specUpdatedOn": "2026-10-22",
        "specHistory": [
          {
            "version": 1,
            "date": "2026-10-22",
            "reason": "First specification.",
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        "callExpects": "no",
        "format": "ladder",
        "group": "th035-crwv-capex-intensity",
        "threshold": 265,
        "direction": "above",
        "unit": "%",
        "think": {
          "baseRate": "CoreWeave's purchases of property and equipment as a share of revenue was 249.4% for the quarter ended June 30, 2026, by its filing on SEC EDGAR.",
          "outsideView": "A year earlier, for the quarter ended June 30, 2025, the same line read 202.4%, so the rungs sit on the last print.",
          "wouldChange": "A change in product mix, a one-time charge, or a reclassified line would move the reading."
        }
      },
      "url": "https://deepstack.ltd/docket/#test-th035-t03",
      "storyUrl": "https://deepstack.ltd/theses/oracle-rpo-conversion-margin-break/#tests",
      "resultUrl": null,
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          "model": "claude-opus-5",
          "p": 33,
          "at": "2026-10-22T03:25:34Z"
        },
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          "model": "deepseek-reasoner",
          "p": 25,
          "at": "2026-10-22T03:25:48Z"
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      ],
      "readers": null
    },
    {
      "id": "th035-t04",
      "part": null,
      "thesis": 35,
      "slug": "oracle-rpo-conversion-margin-break",
      "when": "December 14, 2026",
      "whenLabel": "Dec 14, 2026",
      "date": "2026-12-14",
      "precision": "day",
      "event": "Oracle, operating cash flow as a share of revenue, quarter ended November 30, 2026: whether it comes in at or above 95%.",
      "status": "pending",
      "resultId": null,
      "sameAs": null,
      "stage": "pre",
      "callExpects": "yes",
      "callExpectsBy": "Desk Editor (level B)",
      "callExpectsAt": "2026-10-22T03:45:00Z",
      "callProbability": 70,
      "callProbabilityAt": "2026-10-22T03:45:00Z",
      "callProbabilityHistory": [],
      "source": {
        "kind": "thesis",
        "ref": "tests[3].date",
        "url": null
      },
      "resolver": {
        "kind": "earnings",
        "symbol": "ORCL",
        "rule": "Divide the net cash from operating activities by the revenue that Oracle reports for the quarter ended November 30, 2026 in its 10-Q or 10-K filing on SEC EDGAR. The answer is yes if the ratio is at or above 95.0%; no if it is below 95.0%.",
        "question": "Did the net cash from operating activities of Oracle for the quarter ended November 30, 2026 come to at or above 95.0% of its revenue?",
        "source": {
          "label": "SEC EDGAR, XBRL company facts of Oracle (Forms 10-Q and 10-K)",
          "url": "https://data.sec.gov/api/xbrl/companyfacts/CIK0001341439.json"
        },
        "ambiguity": "If Oracle has not filed by January 18, 2027, or a filing restates a period the rule reads, the test is inconclusive, and the Result says what was read and what was missing.",
        "specState": "approved",
        "specVersion": 1,
        "specUpdatedOn": "2026-10-22",
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            "version": 1,
            "date": "2026-10-22",
            "reason": "First specification.",
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        ],
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        "format": "ladder",
        "group": "th035-orcl-ocf-margin",
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        "direction": "above",
        "unit": "%",
        "think": {
          "baseRate": "Oracle's operating cash flow as a share of revenue was 119.4% for the quarter ended August 31, 2026, by its filing on SEC EDGAR.",
          "outsideView": "A year earlier, for the quarter ended August 31, 2025, the same line read 54.5%, so the rungs sit on the last print.",
          "wouldChange": "A change in product mix, a one-time charge, or a reclassified line would move the reading."
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      "url": "https://deepstack.ltd/docket/#test-th035-t04",
      "storyUrl": "https://deepstack.ltd/theses/oracle-rpo-conversion-margin-break/#tests",
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          "p": 2,
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    },
    {
      "id": "th035-t05",
      "part": null,
      "thesis": 35,
      "slug": "oracle-rpo-conversion-margin-break",
      "when": "December 14, 2026",
      "whenLabel": "Dec 14, 2026",
      "date": "2026-12-14",
      "precision": "day",
      "event": "Oracle, operating cash flow as a share of revenue, quarter ended November 30, 2026: whether it comes in at or above 112%.",
      "status": "pending",
      "resultId": null,
      "sameAs": null,
      "stage": "pre",
      "callExpects": "either",
      "callExpectsBy": "Desk Editor (level B)",
      "callExpectsAt": "2026-10-22T03:45:00Z",
      "callProbability": 50,
      "callProbabilityAt": "2026-10-22T03:45:00Z",
      "callProbabilityHistory": [],
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        "kind": "thesis",
        "ref": "tests[4].date",
        "url": null
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      "resolver": {
        "kind": "earnings",
        "symbol": "ORCL",
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        "question": "Did the net cash from operating activities of Oracle for the quarter ended November 30, 2026 come to at or above 112.0% of its revenue?",
        "source": {
          "label": "SEC EDGAR, XBRL company facts of Oracle (Forms 10-Q and 10-K)",
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          "baseRate": "Oracle's operating cash flow as a share of revenue was 119.4% for the quarter ended August 31, 2026, by its filing on SEC EDGAR.",
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    {
      "id": "th035-t06",
      "part": null,
      "thesis": 35,
      "slug": "oracle-rpo-conversion-margin-break",
      "when": "December 14, 2026",
      "whenLabel": "Dec 14, 2026",
      "date": "2026-12-14",
      "precision": "day",
      "event": "Oracle, operating cash flow as a share of revenue, quarter ended November 30, 2026: whether it comes in at or above 125%.",
      "status": "pending",
      "resultId": null,
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      "callExpects": "no",
      "callExpectsBy": "Desk Editor (level B)",
      "callExpectsAt": "2026-10-22T03:45:00Z",
      "callProbability": 28,
      "callProbabilityAt": "2026-10-22T03:45:00Z",
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        "kind": "thesis",
        "ref": "tests[5].date",
        "url": null
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        "question": "Did the net cash from operating activities of Oracle for the quarter ended November 30, 2026 come to at or above 125.0% of its revenue?",
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