Oracle’s $125 Billion Debt Pile Tests Wall Street’s Faith in a $553 Billion AI Backlog

Oracle's $50B AI investment plan faces credit market pushback, legal challenges, and a $100B capital need by 2028, despite a $553B backlog.

Oracle is racing to build the physical backbone of the artificial intelligence revolution, spending tens of billions on data centers and server infrastructure. But the financial engineering required to fund that ambition is creating friction across Wall Street, from credit markets to equity analysts.

The company’s stock closed Monday at €145.90, recovering somewhat from recent turbulence but still nursing a double-digit percentage decline since the start of the year. That recovery came despite a mounting legal headache: a securities class action filed in December 2025, when the shares cratered after management disclosed a disappointing revenue forecast alongside plans to invest $50 billion in AI infrastructure. Plaintiffs allege the board downplayed the risks of that capital spending spree.

Credit Markets Push Back

The financing challenge is becoming acute. Banks including JPMorgan Chase have struggled to syndicate billions of dollars in loans tied to Oracle-leased data centers, according to a Wall Street Journal report. Lenders are bumping up against internal concentration limits for a single borrower, prompting some to walk away entirely. Developers such as Crusoe have shifted to Microsoft as a tenant instead.

Morgan Stanley credit analysts estimate Oracle will need to raise more than $100 billion in additional capital by early 2028, on top of the roughly $50 billion it is already tapping this year. That could test the capacity of multiple bond markets simultaneously.

Wedbush analyst Dan Ives calculates that Oracle has already raised $30 billion through a combination of bonds and preferred stock. The company’s long-term debt has swelled to nearly $125 billion, while free cash flow on a trailing twelve-month basis has turned deeply negative.

A $16 Billion Breakthrough in Michigan

One concrete financing success came on April 27, when Oracle announced it had closed a $16 billion funding package for a data center in Saline, Michigan. Bank of America placed $14 billion in bonds, with PIMCO taking roughly $10 billion and Blackstone contributing about $2 billion in equity. All of the debt carries fixed interest rates.

But the project is not without controversy. The Michigan attorney general has filed an objection to the power supply approval from utility DTE Energy, which has not yet become legally binding. The data center would consume more than one gigawatt of electricity — roughly a quarter of DTE’s current peak demand.

Record Orders, But When Do They Convert?

The bull case rests on an extraordinary backlog. Oracle’s remaining performance obligations — contracted revenue not yet recognized — surged 325% in the fiscal third quarter to $553 billion, the bulk of it from long-term AI deals. Cloud infrastructure revenue jumped 84% to $4.89 billion.

Wedbush initiated coverage on April 24 with an “Outperform” rating and a $225 price target, arguing that Oracle is a fundamental infrastructure provider for the AI era. The firm dismisses concerns about speculative risk, noting that the investments are backed by long-term contracts.

Yet skepticism lingers. Capital expenditures for the current fiscal year have climbed to roughly $50 billion — 43% more than analysts expected just three months ago. Most of the backlog won’t translate into revenue until fiscal 2027 or later. The stock remains about 13% below its 200-day moving average.

Supply Chain Snags and Strategic Pivots

Adding to the unease, Oracle reportedly canceled an order for 300 to 400 server racks from supplier Super Micro Computer in April, a deal valued at over $1 billion, according to Bluefin Research. Morgan Stanley analysts subsequently lowered their price target, citing margin risks in the growing GPU services business.

On the energy front, Oracle announced Monday that its planned “Project Jupiter” AI data center in New Mexico will run primarily on Bloom Energy fuel cells, with a capacity of up to 2.45 gigawatts. The company says switching from gas turbines and diesel generators will cut emissions by more than 90%.

Wall Street Stays Bullish — For Now

Despite the headwinds, 35 of the 46 analysts tracked by LSEG rate Oracle a buy, with a consensus price target near $260 — implying substantial upside from current levels. The company is targeting $90 billion in revenue for fiscal 2027.

Management will report fourth-quarter results on June 10, forecasting revenue growth of 19% to 21% and adjusted earnings per share between $1.96 and $2.00. For investors, the question is whether Oracle can stabilize its supply chain, execute on its massive backlog profitably, and convince credit markets that its debt pile is manageable — before the next quarterly surprise.