S&P Downgrade Threatens Oracle's Investment Grade Status Amid AI Buildout
What happened
S&P downgraded Oracle to BBB, which is one notch above junk status. This downgrade comes amid a complex financial picture for Oracle, which reports cloud infrastructure revenue up 121% and a $664 billion backlog. However, the company reported negative free cash flow of -$28.72 billion for the trailing twelve months through August 2026, and its 2056 bonds are yielding over 8% for the first time.
From aol.com
Why it matters
The threat of a final downgrade could result in $120 billion of Oracle bonds being automatically removed from investment-grade indexes. This situation is critical for understanding how the company is financing its massive AI infrastructure buildout, despite strong revenue growth and new AI contracts.
From aol.com
Who's involved
- OCIOCI is the core cloud infrastructure business unit and primary growth engine within Oracle's structure.
- OracleOracle is the company whose investment grade status is being threatened by the S&P downgrade.
- Oracle CorporationOracle Corporation is the American multinational computer corporation whose bond valuation is impacted by the downgrade threat.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- OracleSpeculative
The increased risk perception might affect investment ratings for HSBC.