Oracle CEO Clay Magouyrk and Mike Sicilia speak with CNBC’s David Faber on October 13, 2025.
CNBC
This year has been a roller coaster. oracle Investors are trying to assess the strength of the software giant’s position in the artificial intelligence boom.
The stock is up more than 30% since the beginning of the year, even after plummeting 23% in October, its worst month since 2001. It rebounded a bit in November, rising nearly 10% for the month as of Tuesday.
Ahead of the company’s fiscal second-quarter earnings report on Wednesday, pressure is mounting on management and new CEOs Clay Magouik and Mike Sicilia to show that Oracle can continue to fund the company’s aggressive infrastructure plans while convincing Wall Street that its AI-powered hypergrowth story remains intact.
Oracle has emerged as a more central player in the AI space in recent months, largely due to a $300 billion deal with OpenAI revealed in September that includes the AI startup buying computing power over a period of about five years starting in 2027.
Funding Oracle’s computing expansion will require massive debt. In late September, Oracle raised $18 billion in a jumbo bond sale, one of the largest debt issuances in history in the tech industry, and is now the largest issuer of investment-grade debt among non-financial companies, according to Citi.
“As a credit investor, there’s something inherently uncomfortable about the kind of capital-intensive transformation we’re facing,” Daniel Solido, head of U.S. investment-grade credit strategy at Citi, said Friday in a video call with investors, a replay of which was provided to reporters.
Oracle has secured billions of dollars in construction financing through a consortium of banks for data centers in New Mexico and Wisconsin. Citi analyst Tyler Radke expects Oracle to raise about $20 billion to $30 billion in debt each year for the next three years.
The company’s combined short-term and long-term debt, including lease obligations, was $111.6 billion in August, up from $84.5 billion a year earlier, while cash and equivalents fell to $10.45 billion from $10.6 billion, according to FactSet.
While Oracle aims to build enough capacity to meet growing demand from customers like OpenAI, the public has questioned whether the company will tap sources other than the bond market.
“Oracle will be looking at all options: off-balance sheet facilities, debt financing, equity issuance, or perhaps interest from foreign investors, sovereign wealth funds,” Rishi Jallia, a software analyst at RBC Capital Markets, said in an interview. Jallia recommends owning the stock.
A credit investor interviewed by CNBC emphasized: meta One of the financing agreements used to develop the AI data center is a $27 billion deal with Blue Owl Capital, a joint venture between the two companies.
The market is also debating whether Oracle could use vendor financing options to reduce the amount of upfront capital needed to start up a data center. This includes securing favorable financing terms with suppliers such as: Nvidiaa credit investor told CNBC. However, that scenario would use Nvidia’s chips as collateral, raising concerns about GPU depreciation.
An Oracle spokesperson declined to comment.
Growing skepticism
The discomfort mentioned by Sorid sent Oracle’s five-year credit default swaps to new multi-year highs. Credit default swaps are like insurance for investors, with the buyer paying compensation in case the borrower is unable to repay the debt. Bond investors told CNBC that bonds have become a popular way to hedge the risks associated with AI trading.
Barclays credit analyst morgan stanley recommends that clients purchase Oracle’s 5-year CDS. Barclays analyst Andrew Keches told analysts last month that he saw no path for Oracle’s credit trajectory to improve. And in late November, Morgan Stanley analysts said Oracle’s CDS was attracting not just typical credit investors but also “tourists” with little experience with these types of financial products.
Spools of electrical wire outside a series of assembly tents during a media tour of the Stargate AI Data Center on Tuesday, September 23, 2025, in Abilene, Texas, USA. Stargate, with promotional support from President Donald Trump, is building data centers and other infrastructure for artificial intelligence across the United States in collaboration with OpenAI, Oracle, and SoftBank.
Kyle Grillot | Bloomberg | Getty Images
Oracle’s revenue growth and order backlog will be closely monitored as investors try to determine whether the company’s spending plans are justified. Analysts expect sales to rise 15% to $16.2 billion in the latest quarter, according to Street Accounts.
Remaining performance obligations, a measure of unrecognized contract revenue, are expected to exceed $500 billion, an increase of more than five times from a year ago, according to Street Accounts. Oracle’s stock rose 36% in September after it announced that its RPO increased 359% to $455 billion, its best one-day performance since 1992.
Since then, the stock has erased all of those gains and then some.
DA Davidson analyst Gil Luria said he will keep a close eye on Oracle’s core database business, which is a much higher source of profits beyond infrastructure. That will help determine how much flexibility the company has in entering capital markets, he said.
“Oracle can handle its debt burden,” Luria said, recommending owning the stock. “But we need more cash flow to raise more money from here.”
Attention: Oracles “must talk about execution, not just promises”
