Oracle’s aggressive expansion into AI data centers and cloud infrastructure has driven heavy capital spending, ballooning debt above $160 billion, and projected free cash flow deficits exceeding $40 billion in fiscal 2027, pushing its credit profile to the brink of junk status. S&P downgraded the company to BBB- in July 2026—the lowest investment-grade level—with a stable outlook, citing rising leverage in the mid-4x range and weaker cash generation from the AI buildout, including a large OpenAI-related commitment. Moody’s affirmed its Baa2 rating in September but maintained a negative outlook. Five-year credit default swap spreads recently reached 295 basis points, pricing Oracle debt closer to high-yield territory. Further cuts hinge on sustained leverage above 4x, progress toward positive free cash flow by fiscal 2029, or shifts in AI demand and strategy; upcoming quarterly results and capex updates could clarify these thresholds.
Experimental AI-generated summary referencing Polymarket data. This is not trading advice and plays no role in how this market resolves. · UpdatedView resolved

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