Oracle(US:ORCL) Di Yi Cai Jing·2025-12-16 09:15Core Viewpoint - Oracle's aggressive AI spending plan is testing the limits of debt-driven expenditure and acting as a "canary in the coal mine" for the AI sector, with concerns about a potential AI bubble emerging following disappointing earnings reports from Oracle and Broadcom [1] Group 1: CDS Trading and Debt Financing - CDS trading volume for a basket of AI companies, including Oracle, has surged from approximately $2 billion at the beginning of the year to nearly $8 billion by December, indicating increased reliance on debt financing for AI expenditures [2] - Major AI companies, including Meta, Amazon, Alphabet, and Oracle, have issued $88 billion in bonds this fall to fund AI-related projects, reflecting a shift from using cash reserves to debt financing [2] - Morgan Stanley predicts that the financing scale of investment-grade AI corporate bonds will rise to $1.5 trillion by 2030 [2] Group 2: Investor Sentiment and Risk Perception - There has been a significant increase in CDS trading for individual AI companies, particularly those planning to establish large AI data centers, indicating a shift in investor sentiment from viewing these debts as low-risk to recognizing potential investment risks [3] - Investors are increasingly uneasy about the large volume of bonds issued to finance AI infrastructure, as returns on these investments may take years to materialize [3] - The current credit spreads are at historically tight levels, suggesting limited buffer space for the corporate bond market against potential shocks [3] Group 3: Oracle's Specific Challenges - Oracle is a focal point of investor concern due to its lower credit rating compared to other investment-grade AI bonds, with its CDS trading volume more than doubling this year [4] - Following Oracle's third-quarter earnings report, which fell short of analyst expectations, the company's stock and bonds faced significant sell-offs, exacerbated by delays in the construction of at least one AI data center [4] - Moody's reaffirmed Oracle's Baa2 rating with a negative outlook, highlighting significant credit risks associated with the company's reliance on debt financing and the need for continued spending to support growth [6][7]