Core Insights - Oracle Corporation's shares have declined by as much as 37% from their record high in September due to investor concerns over its debt-financed expansion into artificial intelligence infrastructure [1] - The company plans to add approximately $38 billion in debt to fund its cloud and AI initiatives, leading to weaker bond prices and higher yields [2] - There is a growing concern in the market regarding credit risk, as indicated by the increased use of 5-year credit-default-swap contracts [3] Debt and Credit Concerns - Wall Street analysts express fears that the borrowing to support AI infrastructure may strain Oracle's cash flows and delay returns, with over half of fund managers identifying AI spending as a top market risk [4] - Rising credit spreads and bond yields have negatively impacted investor sentiment, raising concerns about execution risks and the timing of returns from AI investments [7] - Despite remaining investment grade, Oracle's credit-market performance is being closely monitored as a potential indicator of the financial health of the broader AI infrastructure sector [8] Strategic Shift and Market Potential - Oracle is transitioning into AI compute contracts that are structured as non-cancelable and non-modifiable, ensuring stable cash flows and cost visibility [5] - The company is pivoting towards data centers and cloud infrastructure designed for AI workloads, financed through newly issued debt [5] - The total addressable market for AI infrastructure is projected to reach $200 billion in annual spending by 2028, with a 42% compound annual growth rate (CAGR) over five years [6]