Key Points
Oracle Corporation (NYSE: ORCL) signed a $300 billion deal with OpenAI in September 2025 to provide AI infrastructure, which is set to start in 2027. This agreement has led to increased scrutiny from bond markets, as investors reacted negatively, pushing the pricing of credit default swaps to 170 basis points for Oracle’s 5-year bonds, indicating a 2.8% annual default probability.
In the first half of 2026, Oracle’s stock declined by 24.8%, similar to Microsoft (NASDAQ: MSFT), which holds a 27% stake in OpenAI. Concerns mount over OpenAI’s financial sustainability, with projections indicating a cash burn of over $650 billion through 2030, against expectations of generating $280 billion in revenue by then, up from an annualized rate of $20 billion in 2025.
The current dynamics in the AI sector are pressuring Oracle and other hyperscalers, such as Microsoft, leading to significant capital expenditure and raising doubts about the value of infrastructure investments for OpenAI’s potential returns.
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