āļø Two Big Tech earnings reports this week ā Oracle and Adobe ā could double as a gut check for the AI trade. Oracle will give us a read on the infrastructure layer ā the pipes and power behind AI ā while Adobe will offer a glimpse into whether consumers and businesses are actually willing to pay for the things AI can do. Both are expected to show strong year-over-year growth ā but, as always, the devil will be in the details. š Oracleās cloud infrastructure business has been on fire, growing nearly 50% last quarter on demand from OpenAI, Nvidia, and others. But with its multibillion-dollar Stargate data center expansion underway, the spotlight is now on margins. Some analysts are warning that the project could chew through all of Oracleās cash flow next year. So itās worth keeping an eye on bookings and future obligations ā if those key measures keep rising, that'll tell you that demand is still hot. If not, the market will start to wonder whether Oracleās gone too far, too fast with its spending. š„§ Adobeās challenge is simpler: itās aiming to turn AI excitement into sales. Itās embedding its Firefly tools across the creative suite, and looking to double its annual recurring revenue (ARR) from AI by the end of the year. And so far, not so good: the ARR recently sat at a modest $125 million ā a sliver of Adobeās overall pie. So this quarter, itās hoping to show that users arenāt just playing with AI features ā theyāre paying for them, too. š¤ Together, these results will tell the market something bigger: whether AI is moving from hype to usefulness. If Oracle shows strong, sustainable demand and Adobe proves it can charge for features, it could add fuel to the broader tech rally. But if not, AIās big frontier may start to look like itās all hat and no cattle. |
