S&P Global Ratings downgrades Oracle to BBB- citing OpenAI dependence
Business
Oracle just got its credit rating knocked down to BBB-, barely above junk status, by S&P Global Ratings.
The main worry? Oracle is betting big on AI infrastructure and leans heavily on OpenAI (yep, Sam Altman's company) for about one-half of its future business commitments.
If OpenAI can't pay up, Oracle could be left paying for pricey, unused data centers.
Cloud shift raises Oracle's spending pressure
Oracle's cloud business is set to jump from 27% to nearly 60% of revenue by 2028, but this shift means more upfront spending and slower payback compared to its old-school software days.
Plus, with tough competition from SpaceX and Alphabet and rising costs in AI expansion, S&P says Oracle's financial flexibility could get squeezed.
Still, S&P kept a stable outlook for now.