Oracle(US:ORCL) Hua Er Jie Jian Wen·2025-11-14 07:44Core Viewpoint - Oracle's aggressive AI strategy is causing significant financial strain, leading to a sharp decline in stock and bond prices amid a broader tech sell-off [1][3][4] Group 1: Stock Performance - Oracle's stock fell 4.2% on November 13, contributing to a nearly 30% drop over the past month, which is almost double the decline of its closest competitor, Meta [1][3] - The company's market value has decreased by over $250 billion since announcing its partnership with OpenAI in September 2022 [3] Group 2: Debt and Financial Structure - Oracle's long-term debt has surged from $75 billion a year ago to approximately $96 billion, with Morgan Stanley predicting it could reach around $290 billion by 2028 [3][6] - The company is currently negotiating $38 billion in debt financing, making its financial structure the weakest among the five largest cloud service providers [6][9] - Oracle is the only major cloud service provider with negative free cash flow, and its debt-to-equity ratio has soared to 500%, significantly higher than Amazon's 50% and Microsoft's 30% [6][9] Group 3: Credit Ratings and Risks - Credit rating agencies have begun to issue warnings regarding Oracle's aggressive expansion strategy, highlighting a conflict between its ambitious AI goals and its investment-grade balance sheet [8][9] - Barclays downgraded Oracle's bond rating from market neutral to underweight, citing excessive spending on AI infrastructure that exceeds free cash flow [9] - Moody's and S&P Global have raised concerns about Oracle's reliance on a few AI companies, particularly OpenAI, which could pose significant credit risks [9][10]