Finance
Oracle bonds sell off as AI investment fuels investor concerns
Published by Global Banking & Finance Review®
Posted on November 15, 2025
3 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on November 15, 2025
3 min readLast updated: January 21, 2026
Oracle's bonds are selling off due to a $38 billion AI investment, raising investor concerns about its debt load and future profitability.
By Matt Tracy
(Reuters) -Oracle bonds have taken a hit in recent days following a report that the cloud and artificial intelligence service provider plans to add another $38 billion to its heavy debt load to fund its AI infrastructure, according to analysts and investors.
Oracle has invested billions of dollars to build its cloud and AI infrastructure this year. With roughly $104 billion in debt outstanding, including $18 billion in bonds, the company is spending more than it earns from operations as it bets on future profits through contracts with startups such as OpenAI.
"What's interesting is most of the (major tech) companies are trying to sustain their (stock) buyback programs at the same time that they're spending on capex currently and to do that, they're actually borrowing and so they're using debt," said Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management.
Renewed questions about the safety of this bet appeared to have surfaced in trading of Oracle's bonds this week, following reporting by CNBC on Thursday that Oracle plans to assume an additional $38 billion in debt.
The price of Oracle's bonds maturing in 2033 with a 4.9% coupon has dipped, pushing yields up more than three basis points over the last two weeks, while the yield on its newer bonds maturing in 2032 with a 4.8% coupon has risen almost two basis points in one week, according to market participants.
Oracle did not immediately respond to a request for comment.
'BUMP IN THE ROAD'
"There's definitely some selling pressure," said Stu Novick, tech sector credit analyst at corporate bond research firm Gimme Credit.
"The numbers are enormous (and) a lot of people are asking, 'how are they actually making money on this stuff?"
Tim Horan, chief investment officer for fixed income at Chilton Trust, said the Oracle bond selloff was unlikely to signal significant troubles for the company, which he said had mechanisms in place to address before cutting dividends.
“I’m viewing this more as a bump in the road … I don’t think what Oracle is experiencing is symptomatic of a popping of some kind of bond market expensive bubble," Horan said.
Other arguments have been made by well-known investors recently against investments in tech giants tapping into AI, such as Oracle, Microsoft and Alphabet-owned Google.
Michael Burry, the investor whose successful bets against the U.S. housing market in 2008 were recounted in the movie "The Big Short," and who is closing his hedge fund, Scion Asset Management, has argued that these companies are quietly stretching out depreciation schedules to make earnings look smoother as they commit money to AI development.
Between 2026 and 2028, those accounting choices could understate depreciation by about $176 billion, inflating reported profits across the sector, Burry estimated.
Michael Field, chief equity strategist for Morningstar in the Netherlands, noted that it is difficult to attach a depreciation number to the economic life of data centers.
"(But) it's decreasing all the time and it could be single, low single-digit years very shortly," Field said.
"It could be three to four years and then something's obsolete, (and) you have to make a hell of a lot of money in that particular time to pay off the infrastructure that went into that site in the first place."
(Reporting by Matt Tracy in Washington, D.C.; Editing by Alden Bentley, Richard Chang, Rod Nickel)
Corporate bonds are debt securities issued by companies to raise capital. Investors purchase these bonds, effectively lending money to the issuer in exchange for periodic interest payments and the return of the bond's face value at maturity.
Debt load refers to the total amount of debt a company has taken on, including loans, bonds, and other financial obligations. A high debt load can indicate financial risk, especially if it exceeds the company's earnings.
AI infrastructure encompasses the hardware and software resources necessary to develop, train, and deploy artificial intelligence models. This includes servers, data storage, and specialized software tools.
Investment portfolios are collections of financial assets, such as stocks, bonds, and real estate, held by an individual or institution. The goal is to achieve a specific investment objective while managing risk.
Credit risk is the possibility that a borrower will fail to meet their debt obligations. This risk is a critical consideration for lenders and investors when evaluating potential investments.
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