Oracle is one of the oldest and most established technology companies in the world. It runs the database software that quietly powers banks, hospitals, retailers, and governments across the globe. For decades, it was considered a safe, predictable business. That reputation is now under serious pressure.
S&P Global, one of the three major agencies that score how creditworthy a company is, has cut Oracle's rating from BBB to BBB-. That single notch matters more than it sounds: BBB- is the last rung before a company's debt is classified as speculative, or "junk." A further downgrade would force many institutional investors, including pension funds and insurance companies, to sell Oracle's bonds automatically because their mandates do not allow them to hold junk-rated debt. That would drive up Oracle's cost of borrowing exactly when it needs cheap money the most.
The reason for the cut is Oracle's bet on OpenAI. Oracle signed a $300 billion, five-year deal to supply OpenAI with computing power, and it is now building enormous data centers to fulfill that commitment. S&P now projects Oracle's infrastructure spending will reach between $90 and $95 billion by 2027, up from a prior estimate of $60 billion. The expected cash shortfall by 2027 is around $42 billion, nearly double what was forecast just months ago.
The structural problem is concentration. OpenAI makes up roughly half of Oracle's $638 billion in future contracted revenue. If OpenAI stumbles, Oracle is left with a vast amount of data center capacity it cannot easily fill. AWS, Google, and Microsoft face similar AI spending pressures, but they have one thing Oracle does not: large internal businesses that can absorb spare capacity if external customers disappear.
The question of whether OpenAI can actually pay its bills is not abstract. Audited financial documents verified by the Financial Times show OpenAI lost approximately $38.5 billion in 2025, against $13 billion in revenue. The more telling number is the operating loss: roughly $21 billion. That means OpenAI spent about $1.60 for every $1 it earned. The ratio is improving from $2.37 the year before, which is the positive reading. But the company is still bleeding cash at a scale with few precedents in corporate history.
Lenders are drawing the same conclusion. SoftBank, the Japanese conglomerate that is one of OpenAI's biggest backers, tried to borrow $10 billion using its OpenAI shares as security. Banks cut the target to $6 billion. Then talks stalled entirely. The reason: lenders could not agree on what an unlisted company like OpenAI is actually worth. OpenAI's shares cannot be sold quickly on an open market, which makes them difficult to use as loan collateral. SoftBank faces a $40 billion bridge loan that must be repaid by March 2027, and the options for doing so are narrowing.
There is also a legal dimension. Bondholders led by an Ohio pension fund have sued Oracle, claiming they were misled. They bought $18 billion in Oracle bonds in September 2025, shortly after the OpenAI deal was announced. Seven weeks later, Oracle came back to markets to borrow another $38 billion. The bondholders say offering documents never disclosed that additional borrowing was already in the works, and their bonds fell in value as a result.
S&P has maintained a stable outlook on Oracle despite the downgrade, meaning it does not expect another cut in the near term. The agency believes Oracle's revenue will eventually grow as data centers come online. But the timeline is long, the debt is real now, and it all rests on one customer that has never turned a profit.
For business operators, the practical takeaway is this: the AI infrastructure buildout is being financed with enormous amounts of borrowed money, by companies betting that AI revenue will eventually catch up. That bet may still pay off. But the financial system is starting to price in the possibility that it does not, and that pricing will work its way through borrowing costs, investment decisions, and corporate priorities across the global economy over the next two to three years.