Why Oracle Stock Is Sinking Once Again

Core Viewpoint - Oracle's shares have declined by 5.1% amid broader market losses, primarily due to the failure to secure financing for a new data center, raising concerns about its credit risk [1][2][7]. Financing Challenges - Oracle has lost a significant financing partner, Blue Owl Capital, which was expected to provide $10 billion for a new data center in Michigan, intensifying investor concerns [2][7]. - The inability to secure this financing adds to the narrative that Oracle is perceived as a credit risk, which could hinder its ability to attract other financing on favorable terms [2][4]. Bond Market Reaction - Despite maintaining investment-grade ratings, Oracle's bonds are trading at levels comparable to junk bonds, indicating increased market skepticism about its financial stability [4][7]. - Credit default swaps for Oracle have reached levels not seen since the financial crisis, reflecting heightened concerns about potential default [4]. Leverage and Risk - Oracle is highly leveraged, relying on expensive debt to fund its rapid expansion in AI data centers, which poses significant risks if AI demand does not continue to grow rapidly [5].