Oracle stock soared in 2025 after announcing a joint venture with OpenAI and SoftBank, committing to invest $500 billion in US AI infrastructure. The surge followed quarterly earnings reports in June and September, with AI-driven deals set to push cloud segment revenue to $166 billion by 2030. Shares have since dropped 40% but are up 16% for the year.

Investor concerns grew over tech firms using debt to fund AI spending, leading to demand for credit default swaps (CDS). Oracle issued nearly $26 billion in bonds, with widened CDS spreads. Analysts warn of rising risks due to increased leverage, as even top-rated tech firms like Microsoft and Alphabet see CDS trading.

Oracle’s total debt rose 40% in the latest earnings results, reaching $124 billion, with $248 billion in additional lease commitments for data centers. Morningstar analyst Luke Yang notes Oracle’s constrained cash flow compared to other tech giants, emphasizing the need to generate cash from data centers amid uncertainties about monetizing AI.

Complications arise for Oracle with its deal with OpenAI, which accounts for a significant portion of future revenue. OpenAI’s costs are projected to reach $1.4 trillion due to AI infrastructure deals, raising doubts about meeting revenue targets. Analysts point to concerns over OpenAI’s ability to deliver amid increasing competition, impacting Oracle’s stock performance. Investors are cautious about AI commitments, doubting demand will meet expectations. Oracle faces concerns about repurposing AI infrastructure and potential data center delays. Company denies reports of OpenAI data center delays until 2028. CEO shake-up adds to investor skepticism, but some remain bullish on Oracle’s management track record.

Read more at Yahoo Finance: How Oracle became a ‘poster child’ for AI bubble fears