Fri Nov 21 15:20:00 UTC 2025: News Article: Oracle’s OpenAI Bet Backfires as Market Value Plummets $315 Billion

New York, NY – November 18, 2025 – Oracle’s ambitious $300 billion partnership with OpenAI, announced in September, appears to be backfiring spectacularly. Since the announcement, Oracle’s market capitalization has plummeted by $315 billion, raising concerns about the company’s heavy reliance on the AI chatbot maker.

While attributing the entire loss solely to the OpenAI deal is a simplification, analysts point out that Oracle’s peers, including Nasdaq, Microsoft, and the Dow Jones US Software Index, have remained relatively stable during the same period. The steep decline suggests investor unease over Oracle’s strategy of investing heavily in debt-financed data centers to support OpenAI’s growing computational needs.

Oracle has essentially become OpenAI’s proxy on the US public market. Oracle aims to provide OpenAI with low upfront costs and a fast path to income generation due to its position as a data center tenant.

At a recent analyst day, Oracle projected cloud computing revenue to reach $166 billion by 2030, fueled primarily by OpenAI. To achieve this, Oracle plans to maintain a hefty capital expenditure budget, estimated to reach around $80 billion annually by 2029. Revenue would come primarily from OpenAI starting in 2027.

However, this aggressive expansion strategy comes with significant risks. Oracle’s net debt has already more than doubled since 2021, reaching 2.5 times its EBITDA, and is projected to nearly double again by 2030. Cash flow is forecast to remain negative for the next five years, raising concerns about the sustainability of Oracle’s debt burden.

The cost of hedging Oracle’s debt is at a three-year high. Credit-default-swap liquidity isn’t great; the increased demand for Oracle CDS comes after $18bn of bond sales in September; a CDS premium in the low 100 basis points isn’t that exciting; and some firms taking the other side of the trade are no mugs.

The woes facing Oracle come as deals with OpenAI are generally not driving stock-prices up anymore. Broadcom and Amazon are both down following OpenAI deal news, while Nvidia’s barely changed since its investment agreement in September.

Summary of the Text:

The original text discusses the negative impact of Oracle’s partnership with OpenAI on Oracle’s stock price. Since announcing the $300 billion deal, Oracle’s market cap has dropped significantly. The article attributes this decline to investor concerns about Oracle’s debt-financed expansion to support OpenAI’s computational demands. It highlights the risks associated with Oracle’s heavy reliance on OpenAI for future revenue growth, as well as the company’s increasing debt burden and negative cash flow projections. The article also suggests that the positive effect of association with OpenAI has waned for large cap public markets.

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