Zhi Tong Cai Jing·2025-12-03 07:25Core Viewpoint - The market is concerned about Oracle's potential issuance of up to $100 billion in debt to fund its AI ambitions, but analysts believe the actual amount will be significantly lower, estimated between $25 billion and $35 billion [1][2]. Debt Issuance and Financial Health - Oracle's recent bond issuance of $18 billion is part of its strategy to finance AI infrastructure, with additional debt issuance of $38 billion planned for data centers [3]. - The company's capital expenditure for the current fiscal year is projected at $35 billion, primarily for its cloud business, leading to a negative free cash flow forecast of $9.7 billion [3][4]. - Standard & Poor's has revised Oracle's outlook to "negative" due to anticipated capital expenditures and debt issuance straining its credit status [4]. Market Sentiment and AI Investment - Analysts note that approximately 84% of Oracle's market value is supported by its non-AI business, indicating a limited current valuation for its AI partnerships [2]. - The overall trend in the tech sector shows a record debt issuance of $108 billion among the top five AI spending companies, which is more than three times the average over the past nine years [3]. Investor Concerns and Future Projections - There is growing concern among investors regarding the sustainability of high capital expenditures without corresponding cash flow, particularly as Oracle's cash reserves may be depleted by November 2026 [4][6]. - The anticipated increase in AI capital expenditures to $600 billion by 2027 raises questions about the ability of the bond market to absorb this surge in supply [6][7].