Why Shares of Oracle Are Getting Crushed This Week

Core Viewpoint - Oracle's stock has declined by 19.2% over the last five trading days, reflecting increasing skepticism regarding its investments in artificial intelligence (AI) [1] Financial Concerns - The bond markets are increasingly worried about Oracle's ability to finance its AI investments, particularly a $300 billion data center deal with OpenAI, which requires significant expenditures on GPUs, networking equipment, and power infrastructure [2] - Wall Street consensus anticipates cash outflows of $23.8 billion, $21 billion, and $14.2 billion for Oracle in its financial years from 2026 to 2028 [4] - The rise in Oracle's corporate bond yields and the increase in credit default swap (CDS) spreads indicate stress in the bond markets [3] Comparison with Peers - Unlike Oracle, Alphabet is expected to generate a cumulative $225 billion in free cash flow from 2025 to 2028, despite a significant increase in capital spending [6] - Alphabet's capital expenditures are primarily aimed at supporting its own computing power needs, allowing it to adjust spending according to its business objectives [6] - The issues facing Oracle appear to be specific to the company rather than indicative of broader market problems [7][8]