“Some people don't like change, but you need to embrace change if the alternative is disaster.” – Said CEO of Twitter Elon Musk
Mad Hedge Technology Letter
March 12, 2025
Fiat Lux
Featured Trade:
(SHOULD I CARE ABOUT ORACLE?)
(ORCL), (AAPL), (META), (AMZN)
If readers want to know if the Oracle AI story is dead or not, then listen here.
The story is still alive, so don’t give up on a good thing.
Oracle is getting swept up with the wider macroeconomic scare that has been triggered by geopolitics.
The fear porn has reached fever pitch and is causing tech stocks to detour from their usual self.
The question now is if the sabre-rattling will result in the economic recession we have been waiting 6 years for.
The flood of government money for at least 4 of those years carried spending habits even if those jobs were unproductive or fraudulent.
As it relates to Oracle’s business model, there is no recession in the sub-sector they are in, but I believe they chose to tank the earnings result since all equities were getting dragged down.
The truth is that Oracle’s business is experiencing great growth in the cloud, and AI demand is accelerating sales growth.
The macroeconomic volatility gave Oracle’s management the perfect excuse to guide down since a high forecast would have resulted in a selloff anyway.
Oracle's leadership encouraged investors to focus on the potential for its cloud business to benefit from enterprise AI spending.
A growing backlog for cloud services is giving the company clear visibility for beating growth metrics.
Meanwhile, sales of Oracle's closely watched cloud-infrastructure business increased 49%, compared with 52% growth for the segment in Oracle's November-ended quarter. Oracle's guidance for the May-ending quarter of 9% revenue growth missed previous forecasts of 9.5% growth.
Oracle's cloud infrastructure business is racing to build out computing capacity for AI startups and other users of the cloud. The Oracle Cloud Infrastructure business rents computing power to other companies, competing against much larger hyperscalers Amazon.com (AMZN), Microsoft (MSFT), and Alphabet's (GOOGL) Google.
Chairman and Chief Technology Officer Larry Ellison said that Oracle is on track to double its data-center capacity during the calendar year. The company now expects capital expenditures to grow to $16 billion for its May-ending fiscal 2025, roughly doubling from a year earlier.
Ellison appeared at the White House in late January with President Donald Trump, OpenAI leader Sam Altman, and SoftBank Chief Executive Masayoshi Son to announce an AI infrastructure effort costing $100 billion called Stargate.
While tight data center capacity has demanded some patience from investors, I believe that we move past some of the capacity constraints in the second half of this calendar year.
The deep selloff from $190 per share to $140 has to hurt.
It was just only a short time ago when Oracle was a deadbeat tech stock left behind by the likes of Apple and Facebook.
They have reinvented themselves as an AI infrastructure company, and that has done wonders for their stock.
When they were down in the dumps, ORCL stock was trading below $50, so we are a far cry from that.
Once the tech market gets its mojo back, ORCL will definitely return back in form to that buy the dip stock that did so well in 2023 and 2024.
Just bide your time until we can jump back into ORCL.
“The key to making things affordable is design and technology improvements, as well as scale.” – Said Elon Musk
Mad Hedge Technology Letter
March 10, 2025
Fiat Lux
Featured Trade:
(TORPEDO FIRED ON TECH MARKET)
(AAPL), (NVDA), (PLTR)
“Brand is just a perception, and perception will match reality over time.” – Said Elon Musk
Mad Hedge Technology Letter
March 7, 2025
Fiat Lux
Featured Trade:
(APPLE LOOKING TO FIND ITS MOJO)
(AAPL), (SAMSUNG), (CHINA)
Not only is Apple losing its edge, but they are failing miserably against the Chinese.
China, with its state-supported behemoths, is the bully on the playground, and Apple can’t too diddlysquat.
Apple has been selling the same product for the past 13 years, and the last iterations have been underwhelming, to say the least.
People don’t want to upgrade, forcing to elongate of the refresh cycle.
It’s now so bad that Apple even ceded 5% market share in the final quarter last year to Chinese competition.
Apple is also very late in integrating AI features, signaling that Apple’s software game is behind the times and mediocre at best.
Apple risks falling behind quickly, and the Chinese have really nailed the consumer tech and muscled into this industry.
They are poised to dominate EVs, smartphones, and other value-added tech in the upcoming years.
They plan to seize the moment and squeeze American companies out of the way for good.
Samsung also has been going through a disastrous down cycle after their Android flagship phone peaked a few years ago.
This new trajectory is a slippery slope, and if Apple goes on the cost-cutting path, there will be little talent left to innovate out of this problem.
The iPhone slipped a point to 18% worldwide market share in 2024.
Apple marked a 2% sales decline for the full year at a time that the wider market grew 4% globally.
China’s smartphone makers are all developing their own in-house AI tools and agents, including services that can perform tasks on a user’s behalf.
Samsung also gave up share to faster-growing Android device makers from China, led by Xiaomi and Vivo. Apple marked a 2% sales decline for the full year.
The situation paints a picture of the non-Chinese smartphone markets in a world of hurt.
I believe that Apple and Samsung have nobody to blame but themselves, as those years of forced technological know-how transfer are coming back to bite them where it hurts.
My friends’ kids have these new Chinese smartphones, and I can tell you that I was surprised about how good they perform.
They are run on Android, which is very different from IoS, but they were premium.
German car companies are also feeling this bitter pill as Chinese companies have taken their own technology and implemented it in a more affordable way.
In aggregate, this latest news is a bad omen for Apple’s earnings season.
They are barely jumping over a lower bar, and that will keep happening until something major is revamped in the product lineup.
I believe any steep sell-off would be a nice opportunity to execute a short-term trade to the upside, but those years of buying and holding Apple until eternity is gone.
Readers must really nitpick what this company is doing because management presides over a dull model, and their China business is falling apart as we speak, all while they helped the local Chinese competition over many years take market share with forced technological transfers.
Surprisingly, the stock has done well during the tariff rhetoric and has trudged along sideways while other stocks have really felt the full brunt of the trade escalation.
If we get a smooth patch, I would advocate for a tactical trade to the upside in AAPL.
“Constantly seek criticism. A well thought out critique of whatever you're doing is as valuable as gold.” – Said Elon Musk
Mad Hedge Technology Letter
March 3, 2025
Fiat Lux
Featured Trade:
(PALANTIR IS ONE TO LOOK AT)
(PLTR), (AI)
