Oracle''s Big Deal with OpenAI Has Money Problems
Introduction
Oracle made a big deal with OpenAI. Oracle will give OpenAI computer power for five years. The deal is worth $300 billion. This makes Oracle a big company for AI. But Oracle needs money to build new buildings for computers. Banks have rules. They cannot give too much money to one company. Some analysts think Oracle''s plan is good. They do not think it is a risk.
Main Body
The agreement started in 2025. Oracle must give computer power to OpenAI from 2027. Oracle is building many computer buildings in Texas, Wisconsin, and New Mexico. The money for these buildings comes from loans. These loans are not on Oracle''s books. Banks like JPMorgan Chase tried to get other banks to help. But many banks have rules. They cannot give too much money to one company. The loans were very big. Some banks said no. For example, a company called Crusoe built a building in Texas. But they gave it to Microsoft, not Oracle. Oracle said it will get $50 billion from selling stocks and bonds. But analysts say Oracle needs $100 billion more in 2027 and 2028. Oracle''s credit rating is not very good. It has a lot of debt. It does not have free cash. The cost to insure Oracle''s bonds went up a lot. Then it went down a little. Some big banks did not help with a building in Michigan. Another company called Related Digital sold bonds. Pimco bought many of them. But Vantage Data Centers said loans for Texas and Wisconsin buildings are almost done. More than 50 banks helped. An Oracle person said partners have many ways to get money. They will finish on time. But analyst Dan Ives from Wedbush said Oracle''s plan is good. He said the market is wrong. Oracle is changing to be a big AI company. He said Oracle already got $30 billion of its $45-50 billion plan. He said Oracle has deals with OpenAI and Nvidia. 35 out of 46 analysts say buy the stock. Oracle''s stock went up 28% last year. But it went down 10% this year because people worry about AI spending.
Conclusion
Oracle is changing its business. It wants to give computers for AI. But it is hard to get money for new buildings. Banks cannot give too much money to one company. Oracle has a lot of debt. Some analysts think Oracle''s plan is good. But many people are not sure. The stock price went down. The cost to protect against Oracle''s problems went up.