Oracle’s plummeting stock price and rising bond yields signal that investors are reevaluating the risks of lending to tech companies in the AI boom. The company’s massive investments in data centers dedicated to OpenAI, a $300 billion partner in the AI cycle, have sparked concerns about its debt financing.
Unlike smaller players like Google, Meta, Amazon, Microsoft, and CloudBees, Oracle is heavily leveraged with a total debt of around $100 billion. Its reliance on credit markets for funding its AI data-center buildouts has led to a sharp increase in bond issuance this year.
Experts say that the industry’s emphasis on digital speed versus physical speed is causing friction. While tech companies can deploy capital quickly, the equipment needed to support their AI infrastructure takes years to manufacture and install.
“We have ambitious achievable goals for capacity delivery worldwide,” Oracle co-CEO Clay Magouyrk said, but investors are worried about how the company will pay for these massive outlays. Analysts describe Oracle’s AI buildout as debt-fueled, even though the company doesn’t explicitly link specific debt to specific capital projects.
The bond-market reaction is particularly concerning, with some newer notes trading like junk bonds. This signals that investors who lend to companies are beginning to reassess the risk of lending into the AI buildout.
“The physical constraints we’re seeing in the industry will eventually catch up,” said data-center researcher Jonathan Koomey. “Reality intervenes, and manufacturers can’t magically expand overnight.”
The AI boom’s emphasis on rapid growth has created a disconnect between tech companies’ expectations for speed and the reality of manufacturing and infrastructure development. As investors reevaluate their risks, Oracle’s debt woes highlight the need for caution in the rapidly evolving AI landscape.
Source: https://fortune.com/2025/12/13/oracle-stock-collapse-ai-boom-debt-data-centers-delayed