The company, which did not immediately respond to requests for comment, has invested billions this year to expand its cloud and AI capabilities. With roughly $104 billion in total debt, including $18 billion in bonds, Oracle is currently spending more than it generates from operations as it positions itself for long-term profits through partnerships with startups such as OpenAI, led by Sam Altman.
Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, noted that the pattern is consistent across major tech firms: “Most of the companies are trying to sustain their stock buyback programs while simultaneously investing in capital expenditures. To do that, they’re borrowing and using debt.”
Trading activity this week suggests that investors are growing cautious about Oracle’s heavy borrowing strategy. The company’s bonds maturing in 2033 with a 4.9% coupon have declined in price, pushing yields up more than three basis points over the last two weeks. Similarly, yields on newer bonds maturing in 2032 with a 4.8% coupon have risen nearly two basis points in just one week, according to market participants.
Stu Novick, tech sector credit analyst at corporate bond research firm Gimme Credit, observed that investors are closely scrutinising the plan: “There’s definitely some selling pressure. The numbers are enormous, and a lot of people are asking how they actually make money on this stuff.”
The developments highlight the growing tension between technology companies’ ambitions in AI and the market’s appetite for large-scale debt financing, raising questions about the balance between strategic investment and financial risk in the sector.