Oracle's $56B debt spike: What's going on?
Oracle just took on $56 billion in new debt and reported its lowest free cash flow in 23 years, all to fuel a big push into AI and cloud tech.
The company raised this cash through bonds and loans, betting big on future growth.
Debt way above rivals, thanks to massive spending
Oracle's debt-to-equity ratio has shot up to about 520%—way higher than other tech giants.
This is mostly because the company ramped up capital spending from $7.8 billion last year to $27.4 billion now, pouring money into new data centers for cloud services and AI.
Cash crunch risks despite revenue boost
Even with $11 billion in cash, Oracle's current ratio of 0.62 signals it could struggle with short-term bills as spending outpaces incoming cash.
Still growing fast—but credit agencies are worried
On the bright side, Oracle's revenue jumped 12% to $14.9 billion last quarter, with cloud sales up 28%.
A huge backlog (mainly from a massive OpenAI deal) suggests long-term growth ahead.
But S&P isn't convinced—they've put Oracle on negative watch due to high debt levels and heavy reliance on one customer.