Oracle issued $18B in bonds and secured a $38B loan to fund AI expansion, with interest payments now consuming 20% of quarterly net income. Shares dropped 42% amid debt concerns. AI capex will eat up 94% of operating cash flow in 2025 and 2026, putting pressure on margins.

Despite optimism around AI pivot, Oracle stock plunged 42% from its high, now trading at $200. Analysts project explosive cloud growth, contrasting with lagging performance. Oracle’s balance sheet risks from AI bets have sparked investor jitters. Interest payments now eat into 20% of quarterly net income.

Oracle faces a cash crunch as AI capex is set to consume 94% of operating cash flow in 2025 and 2026, up from 76% last year. Global data center spend could hit $3 trillion by 2028, fueled by debt, potentially leading to overcapacity and financial strain. Meta Platforms raised $30 billion in October for AI expansion.

KeyBanc analysts predict Oracle will need to borrow $100 billion over the next four years for OpenAI contracts, raising leverage risks. Oracle’s AI strategy focuses on big plays rather than broad ecosystem plays, tying closely to OpenAI amid concerns over the partner’s finances and Oracle’s execution speed.

Oracle’s stock plunged 42% due to concerns over leveraged AI bets and unproven demand. Q3 bookings hit $2.4 billion, showcasing AI immersion, but vulnerabilities remain without a strong moat or cash reserve like Nvidia. With balance-sheet strains and concentration risks, the downside is steep.

Rethink retirement plans with three quick questions potentially leading to early retirement. Accumulation vs distribution is key in retirement planning, causing many to rethink their investment strategies. Find out if you can retire earlier than expected by spending 5 minutes to learn more.

Read more at Yahoo Finance: Here’s Why Oracle Is Not the Next Nvidia