Oracle's Big AI Bet Faces Credit Risk, Rating Agency Warns

Oracle stock gained momentum Thursday after Moody’s Ratings highlighted risks tied to its $300 billion AI contracts but stopped short of a downgrade. According to Reuters, Moody’s warned that Oracle’s dependence on large deals with a few AI firms could threaten its business model. Moody’s likened Oracle’s data center buildout to a massive project financing and cautioned that rising debt over EBITDA could drive negative cash flow for years. Moody’s analysts saw "tremendous potential" in Oracle’s AI infrastructure but warned that counterparty risk remains a key concern. OpenAI is reportedly unable to meet its $300 billion agreement with Oracle due to financial struggles. While some experts view the partnership as proof of OpenAI’s early AI leadership, short-seller Jim Chanos remains skeptical, likening Oracle’s backlog to past accounting controversies. The stock has surged 81% year-to-date, and rose 1.36% to $305.51 in Thursday’s premarket trading.