Oracle is expanding AI data centers, notably for OpenAI, under a multi-year deal, but is adding more debt to finance this infrastructure. If AI sentiment changes or OpenAI struggles, Oracle may face financial risks. Other tech giants are also investing heavily in AI, with Oracle at the highest risk if the AI market falters.

Oracle has accumulated significant debt, reaching $91 billion in total debt and $14 billion in lease liabilities. The company’s AI infrastructure deals require additional debt, with $18 billion in new bonds issued. Oracle’s free cash flow has turned negative, and its AI investments may not yield high margins compared to its core business.

OpenAI’s lack of a competitive advantage poses risks for Oracle, which is heavily investing in AI infrastructure for the company. OpenAI will need to raise substantial capital, potentially through an IPO. If OpenAI faces challenges, Oracle could be left with costly AI infrastructure. Oracle’s massive debt and risky investments in AI pose significant financial risks.

Investors should consider the potential risks of investing in Oracle, as the company’s heavy debt load and AI investments could lead to financial challenges. Other stocks may offer better investment opportunities with higher potential returns. The Motley Fool Stock Advisor team has identified 10 top stocks for investors to consider, which may outperform Oracle in the long run.

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