The race to dominate artificial intelligence infrastructure is pushing Oracle into unprecedented financial territory. The software behemoth is currently negotiating a staggering $38 billion credit facility to fund new data centers specifically for OpenAI, marking what could become one of the largest AI infrastructure financings in history. This aggressive expansion comes at a significant cost, with mounting debt levels beginning to concern credit analysts.
Financial Markets Show Rising Concern
Morgan Stanley researchers have highlighted growing unease in credit markets. The cost of Oracle’s five-year credit default swaps reached 1.25 percentage points in November, representing the highest level since 2022. The investment bank projects these spreads could potentially exceed 1.5 percentage points by 2026 if Oracle fails to provide greater clarity around its financing strategy.
This year alone, Oracle has undertaken substantial borrowing:
– $18 billion raised through bond issuances
– $18 billion credit facility for a New Mexico project
– $38 billion new financing currently under negotiation
The scale of development is massive, with the Financial Times reporting bank discussions focus on data center construction in Texas and Wisconsin through a partnership with Vantage Data Centers, all dedicated to supporting OpenAI’s computational needs.
Customer Concentration Creates Vulnerability
Market experts are noting an unusual risk factor in Oracle’s growth story. Approximately two-thirds of the company’s $500 billion backlog depends on a single client: OpenAI. The AI pioneer is leasing cloud infrastructure through Oracle Cloud Infrastructure, with estimated annual costs reaching roughly $60 billion.
Oracle CFO Doug Kehring has emphasized contract stability, noting agreements are non-cancellable, not tied to specific milestones, and guarantee both GPU access and data center capacity upon signing. However, this substantial reliance on one customer creates potential vulnerability should OpenAI’s growth trajectory change or if the competitive AI landscape undergoes significant shifts.
Should investors sell immediately? Or is it worth buying Oracle?
Deutsche Bank analysis suggests that without OpenAI-related revenue, Oracle’s earnings per share could decline by $4 to $17 by 2030, with free cash flow potentially shrinking by $10 to $31 billion.
Investor Sentiment Turns Cautious
Wall Street has responded cautiously to Oracle’s ambitious plans. The company’s market valuation has declined approximately 30% over the past two months as investors weigh the substantial capital requirements, escalating debt, and customer concentration risks.
All eyes now turn to the December 15 earnings call, where analysts expect second-quarter fiscal 2026 results of $1.64 per share earnings on revenue of $16.20 billion. The central question remains how Oracle plans to finance both its “Stargate” initiative and additional data center projects.
Company leadership maintains a calm outlook, suggesting the majority of expenditures remain 12 to 18 months out and that multiple financing options exist—including debt instruments, supplier financing, and potentially even equity offerings.
Despite current concerns, several analysts remain optimistic about Oracle’s long-term positioning. HSBC has established a $382 price target, while Guggenheim has labeled the company a “decades stock,” reflecting confidence in its extended growth potential.
Oracle projects its AI platform will generate approximately $20 billion in annual revenue by 2030, requiring roughly 50% yearly growth over a five-year period. Whether the company can manage this aggressive expansion without overextending its balance sheet will likely determine share price performance in coming quarters.
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