Oracle Shares Under Pressure as Debt Concerns Overshadow AI Ambitions

Oracle's aggressive push into artificial intelligence is facing investor skepticism as mounting debt levels trigger a significant selloff. While the technology giant continues to make strategic moves in its healthcare division, market participants are shifting their focus from growth potential to balance sheet health, creating substantial pressure on the company's stock.

The core issue driving the market retreat centers on Oracle's substantial borrowing to fund its AI infrastructure expansion. To compete effectively with major cloud service providers, the company has issued approximately $18 billion in bonds. This massive capital injection aims to accelerate Oracle's AI capabilities, but credit market risk premiums are rapidly increasing, raising concerns among institutional investors.

Credit Default Swaps, which measure default risk, have shown notable upward movement. Market experts worry that Oracle faces substantial capital expenditure requirements long before corresponding revenue streams can materialize. Unlike semiconductor manufacturers that see immediate benefits from AI spending, infrastructure providers like Oracle must first bear the full financial burden of building their capabilities.

Strategic Gains Lost in Broader Concerns

Despite the negative sentiment, Oracle has achieved several operational successes. The appointment of Stephen Rusckowski, former Quest Diagnostics CEO, to its board brings valuable expertise to advance the integration of the Cerner acquisition. Additionally, the healthcare division has secured important certifications for new AI-powered data systems.

Should investors sell immediately? Or is it worth buying Oracle?

However, the current market environment prioritizes safety over growth potential. These strategic developments are being completely overshadowed by escalating debt concerns. While equity analysts point to stable cloud revenue figures, credit analysts are sounding alarms about financial leverage—a conflict that bearish investors are currently winning.

Technical Breakdown Compounds Problems

Fundamental worries have now manifested in technical deterioration. Recent declines have pushed Oracle's shares below the psychologically significant 200-day moving average, a key technical indicator that has accelerated downward momentum.

Until credit market risk assessment stabilizes, positive corporate developments may struggle to generate sustainable recovery. The critical question for investors remains whether Oracle can monetize its expensive AI investments quickly enough to reassure nervous creditors and restore market confidence.