Oracle’s recent $300 billion cloud compute contract with OpenAI may necessitate borrowing around $100 billion in the next four years for essential datacenter development, according to KeyBanc estimates. The firm predicts Oracle could require $25 billion annually to build out its cloud infrastructure, raising concerns about its financial sustainability amid rising debt. Oracle’s recent earnings report revealed a staggering 359% year-over-year increase in total remaining performance obligations (RPO), now at $455 billion. With approximately $82.2 billion in long-term debt and only $10 billion in cash on hand, Oracle’s situation raises alarm bells about potential unpaid bills if the AI bubble bursts. As OpenAI also seeks funding amidst operating at a loss, the situation echoes past investment bubbles. Payments from OpenAI to Oracle for infrastructure are anticipated to begin in 2027, creating a critical window before financial viability must be ensured. Concerns mount over potential counterparty risks amid escalating debt levels.
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