While Oracle continues to capture investor imagination with its aggressive push into artificial intelligence, a significant divergence is emerging between equity optimism and credit market anxiety. As shareholders grow bullish ahead of the upcoming quarterly earnings, the bond market is issuing its most severe warning signal since the 2008 financial crisis. This raises a pivotal question: is the company’s expensive dream of AI dominance built on a foundation of debt, or does this present a generational investment opportunity?
Earnings Report Looms as Critical Test
All attention is now focused on December 10th. The release of Oracle’s quarterly financial results is seen as a crucial moment of truth. Investors are demanding concrete evidence that the company’s massive capital expenditures—particularly in light of its $300 billion deal with OpenAI—are translating into tangible revenue and cash flow growth. A strong report could validate the “buy the dip” calls from analysts, while disappointing figures would immediately refocus the market on the company’s rapidly expanding debt load.
The stock, currently showing a gain of 1.00% at €181.84, appears stable in today’s session. However, it is still grappling with the aftermath of a recent correction that has left it down approximately 16% over the past month.
The Bull Case: Unprecedented Demand and Analyst Support
The bullish thesis for Oracle rests heavily on its overflowing order book. Market experts project that remaining performance obligations (RPO) could explode due to insatiable demand for AI cloud infrastructure, potentially swelling to $600 billion. This staggering figure implies a growth rate of about $2 billion per day. This optimism recently received reinforcement from Deutsche Bank, which reaffirmed its positive stance, noting that Oracle’s technology is being validated by major clients like OpenAI.
Should investors sell immediately? Or is it worth buying Oracle?
This perspective was highlighted in a recent assessment by Citigroup. While the analysts there reduced their price target to $375, they maintained their “buy” recommendation. This seemingly contradictory move is explained by a compression in valuation multiples on one hand, set against tremendous operational momentum on the other.
The Bear Case: Soaring Debt and Credit Market Jitters
However, a starkly different narrative is dominating the conversation in credit markets. Reports of a sudden spike in the cost of insuring against a potential default (CDS) have caught the market’s attention. These credit default swaps are now trading at their highest levels in over 15 years.
The root cause of this concern is straightforward: Oracle’s aggressive plans to expand its data center footprint are consuming enormous sums of capital. Projections indicate that net debt could nearly triple by 2028 to finance these AI ambitions. Investors find themselves in a classic dilemma, torn between the hope for exponential growth and worry over the accumulating risks on the balance sheet. This tension has already prompted some institutional investors to trim their positions, suggesting profit-taking following the stock’s previous rally.
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