Oracle’s Credit Risk Rises Amidst AI Investment Scrutiny

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Oracle's Credit Risk Rises Amidst AI Investment Scrutiny

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Oracle’s credit risk has reached an unprecedented level, driven by substantial investments in artificial intelligence infrastructure and an aggressive cash burn rate. On Friday, July 17, 2026, the cost of protecting Oracle against default using credit derivatives, specifically five-year credit default swaps (CDS) spreads, rose to 198.23 basis points, marking its highest recorded close. This figure narrowly surpassed a previous peak of 198.18 basis points recorded on March 27, 2026.

The increased credit risk reflects investor concerns over Oracle’s financial strategy. S&P Global Ratings downgraded Oracle’s long-term issuer credit rating to ‘BBB-‘ from ‘BBB’ on July 9, 2026. This places Oracle at the lowest rung of the investment-grade tier, just one notch above “junk” status. S&P cited the rapidly expanding AI infrastructure business as increasing Oracle’s overall credit risk, highlighting rising capital expenditure requirements, an uncertain path to profitability, a rapidly evolving competitive landscape, and high customer concentration. Oracle’s capital expenditures reached $55.7 billion for fiscal year 2026, a significant increase from $21.2 billion in fiscal

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