Oracle's $300B OpenAI Deal Underwater: Market Cap Drop & Credit Risk Analysis

Oracle Corporation’s (ORCL) $300B 5-year OpenAI cloud deal (starting 2027) has triggered negative market reactions since its September 2025 announcement. The deal is now considered underwater due to a ~$300B market cap drop [1], with shares falling ~33% from $328.33 to $220.49 [0]. Oracle’s 5-year CDS spreads have widened to 80-104 bps [3], the highest since late 2023, signaling growing credit risk. The company plans to raise $38B in debt to fund AI data centers [5], pushing total obligations to $96B with potential tripling to $290B by 2028 [0]. OpenAI’s projected 2025 revenue ($13-20B [4]) is a fraction of the average annual obligation of $60B [0], creating a critical revenue gap.

• Cross-domain correlation
  : AI infrastructure expansion is linked to rising credit risk, as evidenced by CDS spread widening.
• Sentiment disconnect
  : Equity analysts maintain a $360 consensus target [5], while credit markets signal elevated default risk, highlighting a split in investor sentiment.
• Partner dependency
  : Oracle’s future performance hinges on OpenAI scaling revenue by ~6x, creating high-stakes reliance on a single partner.

1. Debt sustainability
   : Planned debt raises may strain debt servicing capacity, with potential total debt reaching $290B by 2028 [0].
2. Revenue gap
   : OpenAI’s projected revenue falls short of obligations, raising concerns about unmet payments.
3. Credit downgrade
   : Widening CDS spreads could lead to rating downgrades, increasing borrowing costs.

1. Long-term AI growth
   : Successful scaling by OpenAI could deliver significant returns from AI cloud services.
2. Upstream benefits
   : Data center investments may benefit GPU makers and other infrastructure suppliers.

Short-term risks (market cap drop, CDS widening) require immediate monitoring, while long-term opportunities depend on OpenAI’s growth.

Critical metrics: ~$300B market cap drop (Sept-Nov), ~33% share price decline, 80-104 bps CDS spreads, $13-20B OpenAI projected 2025 revenue, $60B average annual obligation, $38B planned debt raise. Key monitoring points: Oracle’s Q4 2025 earnings (mid-December), OpenAI’s Q4 revenue, CDS spread changes, deal term updates, and debt issuance plans.