Oracle’s Financial Struggles Amid AI Expansion
Oracle (NYSE: ORCL) faces increasing debt levels as it invests heavily in AI infrastructure, accumulating approximately $108 billion in debt, up from $92.6 billion in May 2023. The tech giant reported a negative free cash flow of $10.3 billion for the six months ending November 30, 2023, after spending $20.5 billion on capital expenditures, which tripled year-over-year.
As of Q2 fiscal 2026, Oracle’s remaining performance obligations from signed contracts amount to $523 billion, boosted by $68 billion in new deals, including contracts with Meta and Nvidia. However, analysts at KeyBanc Capital Markets suggest that Oracle may need to incur an additional $100 billion in debt over the next four years to meet the demands of its OpenAI contract, although company management expressed optimism about requiring significantly less financing.
Investor sentiment has turned negative amid these debt concerns, resulting in a decline in Oracle’s stock value. The company’s success depends on its ability to convert its substantial AI infrastructure backlog into revenue in the coming years.
