S&P Global has downgraded Oracle’s credit rating from BBB to BBB- after identifying OpenAI as a significant credit risk. The rating agency notes that Oracle’s AI division is consuming far more cash than anticipated, with capital spending projected to reach $95 billion by 2027. Revenue from these investments is not expected for several years, leaving the corporation exposed if OpenAI fails. OpenAI represents roughly half of Oracle’s $638 billion in contractual obligations, meaning a collapse would leave massive data centre capacity unfilled.
This situation places Oracle in a more precarious position than AWS, Google, or Microsoft, which can absorb excess capacity using internal workloads and deeper financial reserves. Even the balance sheets of those larger tech giants would suffer a serious hit if OpenAI went under. Doubts regarding the company’s valuation are spreading elsewhere in the finance sector. SoftBank reportedly reduced a loan backed by OpenAI shares from $10 billion to $6 billion as lenders struggled to assess the privately held firm’s worth. Consequently, OpenAI has delayed its planned IPO to 2027.
- Capital spending estimates rose from $60 billion to $95 billion by 2027
- SoftBank cut its OpenAI-backed loan by 40%
- OpenAI IPO is now scheduled for 2027
