Oracle Is One Step From Junk—Can It Afford the AI Boom?

Summary

The past few weeks have seen the bond market start asking a question the stock market has mostly been happy to ignore: Who can actually afford the AI buildout? On July 9, S&P Global Ratings gave its answer for one of the biggest spenders. It cut Oracle Corp.'s NYSE: ORCL long-term credit rating to BBB-, the lowest rung of investment grade and just one notch above junk. The stock has since fallen to around $125, down nearly 30% over the past month and nearly 50% over the past year.Get Oracle alerts:Sign Up Oracle Corporation (ORCL) Price Chart for Tuesday, July, 21, 2026 What makes the downgrade worth more than a passing glance is what it reveals about the wider group. Every major AI spender is pouring money into building out their supply capabilities, but they're all doing it from different financial positions, and the gap between them is widening fast. The Downgrade Isn't Really About Oracle's BusinessOracle Today$121.38 -5.03 (-3.98%) As of 07/20/2026 04:00 PM Eastern52-Week Range$120.03▼$345.72Dividend Yield1.65%P/E Ratio20.82Price Target$265.03 S&P's reasoning for the Oracle downgrade was blunt. The agency admitted it had underestimated the scale of investment required for Oracle's AI ambitions, and now expects the company's free operating cash flow deficit to widen to roughly $42 billion in fiscal 2027, nearly double its earlier forecast. The other red flag was customer concentration. S&P estimates that around half of Oracle's $638 billion in remaining performance obligations is tied to OpenAI alone, and it described that single relationship as a key credit risk. The concern is understandable—Oracle has taken on long-term commitments on facilities and equipment to serve OpenAI's demand, so even if the latter's payments were to slow, Oracle's obligations would still need to be paid in full. Where Each Spender Actually SitsSo what does that mean for Oracle's peers? Well, if you put the four biggest AI spenders side by side, then the divide becomes obvious. The to...