Oracle's Debt Balloons to $108 Billion as AI Spending Soars

Core Viewpoint - Oracle is significantly increasing its debt to finance AI data centers, with a total of $523 billion in remaining performance obligations from signed contracts, including $68 billion added in Q2 of fiscal 2026 [1][2]. Financial Performance - For the six-month period ending November 30, Oracle generated $10.2 billion in operating cash flow but incurred $20.5 billion in capital expenditures, resulting in a negative free cash flow of $10.3 billion [4]. - Capital spending has more than tripled year-over-year as Oracle invests heavily in its AI strategy [4]. Debt Accumulation - Oracle's debt has risen to approximately $108 billion, up from $92.6 billion in May, following an $18 billion bond sale in September [5]. - Analysts estimate that Oracle may need to add $100 billion in debt over the next four years to fulfill its contracts, particularly with OpenAI [8]. Market Reaction - Oracle's stock has declined significantly following the release of its second-quarter report, indicating investor skepticism about the company's ability to convert its AI infrastructure backlog into revenue [6][9]. - The company's AI growth narrative is currently not resonating with investors, leading to a negative sentiment in the market [9].