Also betting big on AI computing power, why does Wall Street treat SpaceX and Oracle differently?

After reading SpaceX's financial report on Wednesday, I kept thinking about one question:

Why is it that both companies are spending tens of billions of dollars building AI computing power, yet Wall Street is particularly tolerant of SpaceX, while with Oracle, they worry every day about capital expenditures and financing pressure?

Ultimately, I think it comes down to the market's different expectations regarding how these two companies make money.

Oracle operates on a long-term contract model.

The latest earnings report shows that its remaining performance obligations have reached $664 billion. At first glance, with so many contracts in hand, future revenue may not seem to be a major concern.

But the problem is, just because a contract is signed doesn’t mean the cash comes in immediately. Data centers need to be built, GPUs have to be purchased, and financing interest must be paid. Whether the revenue will be realized is one thing; how much profit will be made in the end is another.

On the other hand, SpaceX is telling the market a different story.

In the third quarter, AI computing power expanded to 1.7GW, and superintelligent business revenue reached $7.56 billion. It can both meet internal AI needs and sell computing resources to external clients.

If demand for computing power continues to outpace supply in the future, whoever controls the compute has pricing power. Naturally, SpaceX will have the chance to earn more.

But seeing this, it actually feels the market is perhaps too lenient with SpaceX.

It is also burning through cash at a breakneck pace. In the first three quarters of this year, operating cash flow was about $13.1 billion, but capital expenditures soared to $48.1 billion—a gap of a full $35 billion. This is no small sum.

Moreover, the money on SpaceX's books doesn't all come from its own business operations. Funds raised from this year's IPO are also supporting this expansion.

Looking at Oracle again, it's not as passive as many think. Customer prepayments and clients providing their own GPUs are helping to alleviate some funding pressure.

So I think what's worth pondering is this:

• Oracle holds long-term contracts, but the market worries it won’t make enough money;
• SpaceX bears the risk of volatile compute pricing, yet the market is more willing to believe it can make big profits in the future.

Of course, SpaceX has its own strengths, but how long this expectation gap can be sustained is something that still remains to be seen.

In the end, I care less about who announces the construction of how many gigawatts of compute, and more about how much true free cash flow, belonging to shareholders, can actually be brought in for every dollar invested.

SpaceX needs to prove that demand for compute and high prices are sustainable, while Oracle must prove that its $664 billion worth of contracts can ultimately be translated into solid profits and cash.

In this AI compute race, in the end, it is not who builds the most, but who really earns money that will matter.

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