Oracle’s bond prices have fallen sharply after reports that the tech giant may take on an additional $38 billion in debt to expand its AI infrastructure. Analysts are divided over the long-term financial implications of the company’s strategy.
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| Oracle’s bond selloff highlights growing investor concerns over the company’s $38 billion AI expansion debt plan. Despite this, some analysts view the market reaction as an overreaction. Image: CH |
San Francisco, USA – November 15, 2025:
Oracle is under financial scrutiny after reports that it plans to take on an additional $38 billion in debt to fund its ambitious AI and cloud infrastructure expansion. The tech giant, which already has approximately $104 billion in total debt, including $18 billion in bonds, has seen a sharp decline in bond prices as investors grow concerned about the sustainability of its debt-heavy growth strategy.
The news follows months of significant capital investment by Oracle in its artificial intelligence operations and data-center capacity, as the company works to keep up with the rapidly growing demand for AI infrastructure. However, analysts and market participants are now questioning whether Oracle’s current debt levels can be sustained as it chases future revenue growth through major AI contracts, such as those with OpenAI.
Oracle’s decision to borrow additional funds for its AI push mirrors a broader trend among major tech firms, many of which are ramping up spending on capital expenditures (capex) while simultaneously trying to maintain stock buyback programs. As Oracle spends more than it generates from operations, concerns about its growing reliance on debt are starting to make waves in the investment community.
“Most major tech companies are trying to sustain their stock buyback programs at the same time that they’re spending heavily on capex,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. “To do that, they’re borrowing — and relying on debt.”
The bond market has reacted to Oracle’s increasing debt with visible unease. Following the report of Oracle’s plans to take on $38 billion in additional debt, the company’s 2033 bonds (4.9%) saw prices fall and yields rise by more than three basis points over the past two weeks. Meanwhile, yields on its 2032 bonds (4.8%) climbed nearly two basis points in a single week.
“There’s definitely some selling pressure,” said Stu Novick, a credit analyst at Gimme Credit. “The numbers are enormous, and a lot of people are asking how they’re actually making money on this stuff.”
This bond selloff suggests that investors are concerned about the long-term viability of Oracle’s debt strategy, especially if the returns from its AI investments do not materialize as expected.
Despite the market volatility, not all analysts are convinced that Oracle is in serious trouble. Tim Horan, chief investment officer for fixed income at Chilton Trust, believes that the bond weakness is not indicative of a broader financial crisis for Oracle.
“I’m viewing this more as a bump in the road,” Horan said, adding that he doesn’t believe Oracle’s situation is symptomatic of a larger bond-market bubble bursting.
However, the uncertainty around Oracle’s ability to generate returns from its massive AI investments remains a key factor driving investor anxiety.
The broader tech sector is also grappling with the financial strain of massive AI buildouts. Microsoft, Alphabet (Google), and others are similarly investing heavily in data centers and cloud services to meet the growing demand from AI firms. Some high-profile investors, including Michael Burry, have raised concerns that these companies could be masking their financial challenges.
Burry, who famously predicted the 2008 financial crisis, argues that tech firms like Oracle are extending depreciation schedules to smooth over reported earnings while pouring money into AI infrastructure. Burry estimates that between 2026 and 2028, depreciation across the sector could be understated by $176 billion, leading to overstated profits for these companies.
Another key issue for Oracle and its competitors is the rapidly decreasing useful life of the data centers and hardware that are crucial to AI infrastructure. As Michael Field, chief equity strategist at Morningstar in the Netherlands, pointed out, data-center infrastructure has a notoriously short lifespan, with useful life declining to as little as three to four years for some types of equipment.
“If something becomes obsolete in three to four years, you have to make a tremendous amount of money in that short window to justify the cost of the infrastructure,” Field warned, highlighting the financial challenges of AI infrastructure.
Oracle’s bond selloff reflects broader investor concerns over its $38 billion debt plan and its reliance on debt to fund rapid AI expansion. While some analysts argue that this is a temporary setback, the company’s strategy raises important questions about the sustainability of tech firms' spending habits, especially as AI infrastructure quickly becomes outdated.
For Oracle, the next few quarters will be critical in determining whether its AI investments can generate the returns needed to justify such a massive debt burden — or whether the company will face mounting financial pressure as its debt load continues to grow.
As the AI arms race intensifies, Oracle and other tech giants are walking a fine line between financing future growth and risking long-term financial instability.