Oracle bonds sell-off as AI investments fuel investor concerns

By Matt Tracy

(Reuters) – Oracle bonds have taken a hit in recent days following news that the cloud and artificial intelligence The service provider plans to add another $38 billion to its heavy debt load to finance its AI infrastructure, according to analysts and investors.

Oracle has invested billions of dollars this year building its cloud and AI infrastructure. With about $104 billion in outstanding debt, including $18 billion in bonds, the company spends more than it earns from operations as it invests in contracts with startups such as B. relies on future profits OpenAI.

“What’s interesting is that most (big tech) companies are trying to maintain their (stock) repurchase programs while at the same time making investments right now. To do that, they’re actually borrowing and therefore using debt,” said Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management.

Apparently questions have arisen again about the safety of this bet…