Oracle Corp faces near‑junk credit rating amid AI‑driven spending spree

Oracle Corp, the U.S. cloud‑computing giant, is on the brink of a junk‑grade credit rating as its aggressive push into artificial‑intelligence infrastructure strains its balance sheet. In July, S&P Global Ratings cut Oracle’s rating to BBB‑, one notch above junk, while Moody’s issued a negative outlook on its Baa2 rating. The company reported $129.5 billion of debt, a debt‑to‑EBITDA ratio of about 4.3, and disclosed roughly $260 billion in long‑term data‑centre lease commitments. Capital expenditures are projected at up to $95 billion for fiscal 2027, with cash‑flow turning negative and free cash flow insufficient to cover the spending. To fund the expansion, Oracle may need to issue more debt, reduce share buybacks and raise equity capital.

Analysts warn that the leverage could temporarily approach a 5‑times EBITDA multiple, highlighting the financial risks of Oracle’s AI‑focused growth strategy.