How Oracle became a ‘poster child’ for AI bubble fears

Core Viewpoint - Oracle's stock performance in 2025 reflects the ongoing conflict in the tech sector regarding whether AI represents a significant opportunity or a potential risk [1] Group 1: AI Investments and Stock Performance - Oracle announced a joint venture with OpenAI and SoftBank called Stargate, committing to invest $500 billion in US AI infrastructure, which initially boosted the stock price [2] - Following quarterly earnings reports in June and September, optimism around AI drove Oracle's shares higher, with projections indicating cloud segment revenue could reach $166 billion by 2030 [3] - Despite the initial surge, Oracle's shares have dropped over 40% from their September peak, although they remain up 16% for the year [4] Group 2: Debt Concerns and Market Reactions - Investors are increasingly worried about the rising debt levels used to finance AI investments, leading to a demand for credit default swaps (CDS) among major tech firms [4][5] - Oracle has issued nearly $26 billion in bonds this year, with CDS spreads widening significantly, indicating heightened risk perceptions [6] - The company's total debt rose 40% year-over-year to $124 billion, while cash outflow increased from $2.7 billion to $10 billion, raising concerns about financial stability [7]