Karla Barker 
Oracle is catching heat from a Nvidia story it does not control. After reports about Nvidia CEO Jensen Huang and board tensions, investors moved quickly to question Oracle’s heavy reliance on the US chip company. Oracle lost $10 billion in market value in after-hours trading yesterday. The stock is down more than 10% over the past month and 35% this year.
Borrowing costs climb
The balance sheet is the bigger issue. On October 28, Oracle said new stock and bond sales through fiscal 2030, excluding refinancing, would be capped at $20 billion. On November 2, it agreed to sell 86 million new shares for $10 billion and priced $10 billion of bonds. That used the whole four-year budget in one day. Borrowing gets more expensive when a company leans hard on credit, and Oracle is already seeing that. In February, its 2029 notes yielded 4.6%. By November, bonds with the same maturity year needed a 7% yield. Its spread over Treasuries rose from 0.95 to 2.40 percentage points. A 2046 bond sale went from a 6.56% yield in February to 8.67% in November.
Ratings pressure builds
Credit default swaps near 305 basis points last week, up from 58 a year earlier, show that traders are pricing more risk. S&P rates Oracle at BBB-, just one notch above junk. Moody’s and Fitch are two notches higher, but Moody’s has a negative outlook. S&P cut the rating in July and pointed to debt levels in the mid-4x area for fiscal 2027, above its preferred mid-3x range. Any agency could act at any time. A Polymarket contract priced about a 36% chance that Moody’s or S&P cuts Oracle to junk by June 30, 2027.
AI projects add strain
The operating picture is not helping. Microsoft is winding down rentals of Oracle AI compute. Oracle’s OpenAI data center in New Mexico, Project Jupiter, faces an open-ended permit delay. State regulators blamed missed procedural deadlines, and Doña Ana County warned backers about a possible contract breach. Buildings already on site lack power. OpenAI contributes roughly half of Oracle’s revenue backlog, which is a narrow base. S&P has warned that Oracle’s AI strategy carries material credit risk because spending is aggressive and the path to positive cash flow is uncertain. Oracle says demand remains strong, including for earlier-generation GPUs. Perhaps. But with debt costs rising and Nvidia news adding pressure, the market is clearly looking for signs of a downgrade.