Oracle’s recent AI-fueled rally has come undone. In September, the company surged more than 30%, riding the wave of a massive backlog — much of it from a high-profile contract with OpenAI. But now that momentum has reversed entirely. Investors have grown wary of Oracle’s growing debt burden. To build infrastructure for OpenAI and other AI clients, Oracle issued $18 billion in bonds. That pushed its total debt north of $100 billion.
Credit rating firms like Moody’s and S&P are signaling trouble, hinting at a possible downgrade of Oracle’s bonds to junk status. Meanwhile, analysts warn that the company still needs to borrow billions more to meet its spending and dividend targets — all while burning through cash. Morgan Stanley projects Oracle’s adjusted debt could soar to about $300 billion by 2028 when leases and other obligations are factored in.
This turnaround underscores how fast investor sentiment can shift in the AI infrastructure space. Once hailed as a breakout AI cloud star, Oracle now faces a tough road proving that its big bets will pay off. For now, the market seems to be saying: “Show me the earnings.”
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#AI_infrastructure
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#Credit_rating
#Corporate_debt
#Cloud_infrastructure
#AI_hype
#Morgan_Stanley
