Oracle Debt Concerns Ease despite Heavy AI Spending

Oracle shareholders evaluate the risks of debt when UBS indicates the existence of credit stability in the face of increased investments in AI infrastructure.

Oracle stock dropped approximately 0.5% in post-market trading as investors considered a UBS rating, indicating that the corporation is unlikely to suffer an investment-grade credit rating in spite of an escalating debt to AI data center development load.

The commentary has been made at a tender moment in time when Oracle is heavily banking on borrowing to fund new capacity. UBS analyst Matthew Mish remarked that to be downgraded to junk is very unlikely and that the rating agencies might even be tolerant when leverage moves to the lowest end of the investment grade. Oracle has an outstanding debt of approximately 95 billion dollars, which makes it a target for some investors to hedge the credit risk through default swaps.

Spending plans have also attracted more attention because back in December Oracle increased its capital spending perspective in fiscal 2026 by 15 billion dollars to scale up AI-based infrastructure. The company additionally underperformed in terms of outstanding performance commitment, one of the most significant indicators of cloud revenue in the future, and forecasted slower third-quarter performance.

The debt issue is played against a background of increasingly competitive actions in cloud infrastructure, with Oracle pursuing a more substantial portion of enterprise AI loads against its competitors like Amazon and Microsoft. Investors will be keen on having signs that the increase in spending will be converted to anticipated subscription earnings rather than growing interest charges.

In the short run, Oracle has announced that they will pay quarterly dividends of $0.50 per share as of January 23. The focus is now on its fiscal third-quarter earnings update in the middle of March, which is a major testing question on whether cloud demand and margins can follow investment and leverage.