JPMorgan: Oracle's aggressive AI investments raise concerns in the bond market

Jinse Finance reported that Oracle (ORCL.N)'s aggressive AI spending plan has drawn significant attention to its bonds as Wall Street searches for cracks in the AI boom. JPMorgan credit analyst Erica Spear expects that the pressure on the company's bonds will persist into next year. Last week, Oracle's stock price experienced its largest drop in nearly 11 months, and its credit risk indicators climbed to a 16-year high. The company's financial report showed that revenue fell short of market expectations, while its annual capital expenditure target was raised by $15 billion, and its future leasing commitments more than doubled. Co-CEO Clay Magouyrk stated that the company is committed to maintaining its investment-grade debt rating, and that the actual borrowing scale may be lower than analysts' forecasts of over $100 billion. Spear commented, "This is precisely the challenge for investors: management continues to finance investments almost entirely through debt. Although this is not surprising, it remains frustrating given the generally unclear investment timeline and cap."