Name: How Oracle’s AI-Fueled Debt Load Has Investors On Edge
Uploaded: 2026-03-21T17:53:26.000Z
Duration: 5 min 45 s
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The race to build an artificial intelligence ecosystem has propelled massive investments and brought the most unlikely players to the table.

Oracle, the legacy enterprise software company founded in 1977 by co founder Larry Ellison, is one of them.

Oracle is now doubling down on AI cloud computing, but

the jury is still out on whether Oracle will prove to be a winner.

About a year ago, Ellison stood by President Trump and OpenAI CEO Sam Altman to announce Oracle's role in Stargate.

A huge AI data center campus in Abilene, Texas is a very exciting program for Oracle to be a part of.

Stargate raised Oracle's profile as a major contender in the air race and reinforced its push into cloud computing, a move that has drawn both praise and criticism.

In September, the company surprised Wall street after striking one of the biggest cloud deals ever, a $300 billion cloud computing contract with Open Air.

The stock hitting an all time high, up as much as 43% today, closing out its best session since 1992.

Securing OpenAI as a tenant for its data centers cemented Oracle's role, putting it side by side.

That contract really validated many of the things Oracle has been investing in specifically around their cloud infrastructure business.

They were laggard in sort of the traditional cloud build out and so a contract of this size, especially from arguably the leader in AI, was a huge validation of everything that they built.

Oracle soaring stock price briefly made Ellison the world's richest man in September.

Oracle announcing today plans to build a Data center using 50,000 chips from AMD.

As this AI dealmaking spree intensifies at Oracle's AI World in Las Vegas, excitement continued to grow around the tech visionary's dream to become an AI forward company.

But enthusiasm started to wane as investors turned their attention to the massive amount of debt Oracle would need to take out to fund its ambitions and the pressure that would potentially put on its investment grade credit rating.

Those worries started to send Oracle's five year credit default swaps higher in November.

One time AI data center Darling falling another 4% today.

That 35% post earnings pop from September and is now pacing for a fifth straight week of losses.

The move coming as investors seem to be increasingly questioning the pace and magnitude of the AI boom.

If Oracle needs to go out and borrow Money, call it 50 to $100 billion and rates are 30 to 40% higher than expected.

That could dramatically eat into their earnings power and return that they expect to get on these contracts.

November 2025 was the worst month for Oracle stocks since 2001.

In addition to financing concerns, investors questioned whether Oracle was too reliant on OpenAI, which makes up a majority of its backlog.

Reports started to circulate that OpenAI's ChatGPT was losing market share to Google's Gemini.

I think the concern is that did Oracle kind of place their bets with no longer the leader in the space?

And so if OpenAI is going to be in a more challenging position, perhaps Oracle won't be able to get fulfillment on those investment needs.

Analysts eagerly awaited Oracle's second quarter earnings in December.

However, management wasn't able to provide the level of detail the street wanted on financing its data center expansion plans.

Then in February, Oracle announced plans to raise $50 billion in debt and equity, a huge amount of capital credit.

Investors cheered the move and Oracle's willingness to not just rely on the debt market.

Oracle's five year credit default swaps fell 17% in one day as the likelihood of a credit downgrade was reduced.

When the deal was announced, I think it was viewed that OpenAI was in the driver's seat.

You know, they were widely viewed to have kind of the strongest momentum in terms of monthly active, weekly active users, model performance, etc.

And I think since then you've seen Google make some very strong inroads with Gemini.

You've seen Anthropic obviously have a lot of momentum.

It's not that Oracle is in a precarious position, but

we now believe they'll be able to build the capacity, OpenAI will be able to pay for it.

This is really a problem that can only be solved by some of the largest companies in the world that have access the capital and the expertise.

The concern is that OpenAI may not actually be in the driver's seat.

And so is there a scenario where Oracle goes out levers, the company raises a lot of money to buy the equipment to put in these data centers and then OpenAI either can't pay, they have to shorten the contract and then Oracle's kind of left hung dry, so to speak.

Our view is that is a very, very unlikely scenario because demand is massively outpacing supply.

So even if there's a change in terms of who that winner and buyer of the AI infrastructure, chances are if it's not OpenAI, somebody else will fill that.

Still, the market increasingly views Oracle as an unofficial barometer for the AI trade.

Its success could ultimately hinge on access to Capital, Energy and OpenAI's fundraising rounds.

But more importantly, it will serve as a case study as to whether chasing the AI dream was worth it.