Oracle stock sinks as reported AI data center snag puts rising debt in focus

Oracle (ORCL) banal fell astir 5% Wednesday aft the Financial Times reported that backstage lender Blue Owl Capital (OWL) volition not backmost a $10 cardinal woody for its adjacent information halfway arsenic the bundle institution draws capitalist scrutiny implicit its usage of indebtedness to money spending connected AI computing capacity.

Blue Owl, which is Oracle's biggest information halfway partner, had been successful discussions with lenders and Oracle for the woody to put successful a monolithic installation successful Michigan, but negotiations stalled, according to the FT.

That has thrown the financing of the information halfway into question. Oracle responded to the report, telling the FT that last negotiations for a woody to concern the task were "on schedule" with a antithetic equity spouse than Blue Owl.

Blue Owl has been a salient subordinate successful the AI information halfway boom, partnering with Oracle connected its information halfway projects successful Texas and New Mexico Meta arsenic good arsenic inking a woody with Meta to assistance concern its mammoth installation successful Louisiana.

Such arrangements — successful which indebtedness is tied to associated ventures oregon peculiar intent vehicles and not included successful companies' equilibrium sheets — successful summation to monolithic firm enslaved issuances by large tech firms this year, person raised concerns astir however companies are backing their AI buildouts. Oracle successful peculiar faces greater scrutiny arsenic it lacks the beardown interior currency travel that its Big Tech unreality peers boast, according to analysts.

Oracle stock's diminution Wednesday means that shares are down astir 18% for the month. The banal fell aft the company's net past week showed its costs rising much than expected portion the institution bled much currency than investors anticipated. The tech firm's $248 cardinal successful lease obligations revealed successful its quarterly SEC filing added to capitalist fears implicit its increasing indebtedness pile, portion its over-reliance connected OpenAI to conscionable its ambitious gross targets has besides sent shareholders backpedaling.

Although Oracle execs said aft its net results that it's committed to maintaining an investment-grade recognition standing — it presently has a BBB standing connected its bonds — investors haven't been truthful sure, piling into Oracle recognition default swaps that saw spreads scope their highest level since 2009 past week.

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