JPMorgan: Oracle's aggressive AI investment raises concerns in the bond market

Golden Finance reports that Oracle (ORCL.N)'s aggressive artificial intelligence spending plans have drawn significant attention as its bonds seek to find cracks in the AI boom on Wall Street. JPMorgan credit analyst Erica Spear expects that the company’s bonds will face ongoing pressure next year. Last week, Oracle’s stock experienced its largest decline in nearly 11 months, and its credit risk indicator also rose to a 16-year high. The company’s earnings report showed revenue below market expectations, while it raised its annual capital expenditure target by $15 billion and more than doubled its future lease commitments. Co-CEO Clay Magouyrk stated that the company is committed to maintaining its investment-grade debt rating, and its actual borrowing scale may be less than the analyst forecast of over $100 billion. Spear said, “For investors, the challenge lies precisely here: management continues to finance investments almost entirely through debt, which is not surprising, but in an environment where investment timelines and caps are generally unclear, this approach remains frustrating.”