Oracle has borne the brunt of a tech market sell-off as investors weigh its heavy leverage backing a bold pivot into artificial intelligence and its OpenAI contracts.
The software maker led by Larry Ellison has signaled a sweeping push into cloud infrastructure, planning to spend hundreds of billions on chips and data centers to support OpenAI workloads and other AI services.
Shares have slumped about 25% in the last month, roughly twice the decline of the next-worst hyperscaler, and the slide has wiped out more than $250 billion of market value since the OpenAI deals were disclosed in September.
A Financial Times debt index tracking Oracle’s bonds has fallen roughly 6% since mid-September, a drop significantly worse than peers and fueling questions about the economics of its AI bet.
Analysts caution that the all-out AI push is capital-intensive and may not deliver near-term value, noting that Oracle shifted into cloud services later than rivals and now carries a heavy debt load. They warn that lofty valuations and the risk of lossmaking AI ventures could weigh on returns.
The company has around $96 billion in long-term debt, with forecasts it could rise further in coming years. It has issued about $18 billion in bonds in September and is pursuing additional debt financing of several tens of billions. Barclays downgraded its debt outlook, and Moody’s along with S&P Global highlighted concentration and funding risks tied to its OpenAI-centric strategy.
