- S&P downgraded Oracle's rating to BBB- due to massive AI investments, placing it one notch above junk status.
- The downgrade is driven by Oracle's AI infrastructure expansion, leading to a forecasted $42 billion cash flow deficit and increased debt.
- S&P highlights Oracle's high dependency on OpenAI as a central credit risk, with half of promised service volume tied to this single customer.
- Oracle is transitioning to a cloud infrastructure business, expected to reach 60% of revenue by 2028, but faces weaker financial flexibility compared to rivals.
- The company has cut over 21,000 jobs to fund AI investments, amid broader regulatory warnings about debt-financed AI risks resembling past financial crises.