Hexcore
2 dk
16 Haziran 2026
## Oracle's AI Woes: Investors Concerned About Rising Expenses and Debt ##
Oracle, a long-time player in the cloud computing sector, has been making moves to strengthen its position against major rivals like Amazon and Microsoft. The company has signed agreements with OpenAI and Meta to develop cutting-edge AI capabilities.
However, Oracle's investors are growing concerned about the company's financial situation. With no steady cash inflow from big tech companies, Oracle is being forced to dip into its own reserves to fund its AI development efforts.
According to JMP Securities, Oracle's accelerated data center buildout is eating away at its short-term gross margin and raising questions among investors about capital expenditures, financing, and returns.
The company expects to spend around $70 billion in net capital expenditures this year, with plans to finance it through a combination of debt and equity, including a previously announced $20 billion share repurchase program. This comes on top of the $43 billion in debt funding and $5 billion in equity the company secured last May.
As analysts at Melius Research point out, Oracle's aggressive spending could be unsustainable if it fails to generate sufficient returns from its AI initiatives. Moreover, slowing down competitors' spending is unlikely, and Oracle may need to find ways to slow down its own expenses to maintain its market share.
Globally, Morgan Stanley predicts that debt financing for AI-related projects will increase by two-thirds by 2026, reaching approximately $570 billion. By 2027, cloud service providers are expected to spend over $1 trillion on AI infrastructure.
Oracle's projected 2026 expenses far exceed its usual spending patterns, resulting in a free cash flow deficit of $23.7 billion, compared to just $394 million in the previous year.
