Amazon and Oracle Are Extremely Anxious About The Upcoming Fed Meeting

Alex Sirois

Wed, September 9, 2026 at 6:37 PM GMT+3 4 min read

Quick Read

Oracle's OCI grew 93% and Amazon's AWS grew 37%, but both ORCL and AMZN now run negative free cash flow as AI datacenter capex explodes.
Oracle must raise $40 billion in new debt into a 4.78% 10-year Treasury environment, making a Fed dovish pivot critical to avoid heavy shareholder dilution.
Amazon's 39.4% AWS margins and diversified retail cash flows make it the safer AI cloud bet if rates stay elevated longer.
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Oracle (NYSE: ORCL) and Amazon (NASDAQ: AMZN) both just reported standout cloud quarters, and both are pouring unprecedented sums into AI datacenters. Oracle wrapped Q4 FY2026 on June 10, and Amazon delivered Q2 FY2026 on July 30. With the Fed Funds upper bound sitting at 3.75% and the 10-year Treasury yield at 4.78%, financing this buildout is getting expensive. The upcoming Fed meeting this month heightens those fears.

Stephen Chernin / Getty Images

Cloud Backlogs Surge While Cash Flow Flips Negative

Oracle's Q4 revenue hit $19.18 billion with EPS of $2.11, and OCI grew 93% year over year. Remaining performance obligations ballooned to $638 billion, which management called "unprecedented." The catch: free cash flow ran negative $23.69 billion for FY2026, and Oracle plans to raise roughly $40 billion in debt and equity in FY2027 to fund a $70 billion capex outlay.

Amazon's AWS grew 37% to $42.23 billion, its fastest pace in 18 quarters, with an AWS backlog of $496 billion. But Q2 capex alone reached $54.2 billion, up nearly 68% year over year, and trailing free cash flow flipped to negative $7.6 billion. CEO Andy Jassy admitted the company will "encounter free cash flow headwinds until these data centers come online."

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Why Rates Bite These Two Harder

Amazon has retail, ads, and subscription cash to lean on. Oracle relies almost entirely on legacy software cash flow. CFO Brian Olsavsky acknowledged Amazon has "issued debt this year" and is weighing options. Oracle's balance sheet already carries $218.7 billion in total liabilities, and every basis point on new issuance matters when you are printing $40 billion of paper into a 4.78% 10-year environment.

Rate Exposure Lens

Oracle

Amazon

FY Capex Plan

~$70B (FY27)

~$200B (2026)

Free Cash Flow

-$23.69B

-$7.6B TTM

Non-Cloud Cash Cushion

Legacy software

Retail, ads, Prime

New Funding Need

$40B debt/equity

Debt optional

What I Am Watching Into the Fed Meeting

Oracle stock has been punished, down 31.07% over the past year, though it rallied 15% in the past week as the OpenAI ecosystem came back into favor. Amazon has quietly climbed 8.96% over 12 months. A dovish Fed pivot would ease Oracle's funding math dramatically. A hawkish surprise could force Larry Ellison's team to lean harder on that $20 billion at-the-market equity issuance, diluting shareholders.

Why I Lean Amazon Right Now

For AI cloud exposure with a built-in shock absorber, Amazon carries more diversified cash flow. AWS margins ran at 39.4%, and retail cash flow can carry the capex weight even if the Fed stays higher for longer. Oracle offers more upside if rates fall and the RPO converts to revenue on schedule, but I need to see cash capex peak before I get comfortable. Oracle offers higher torque to a Fed pivot and OCI execution, while Amazon's diversification offers more insulation if rates stay elevated.

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