Athira Sethu
Kochi, 18 Sep 2025
Moody’s, one of the largest credit rating agencies, has expressed some of its concerns regarding some of the risks associated with Oracle Corp’s $300 billion in new artificial intelligence (AI) deals signed in recent times, but it has not yet adjusted Oracle’s credit rating.
Oracle this month announced that it anticipates its Oracle Cloud Infrastructure unit will generate more than half a trillion dollars in booked revenue. One large transaction behind the hope is that of OpenAI, which has signed a deal with Oracle to buy five years’ worth of computing power worth $300 billion. The contract is one of the largest cloud contracts in history, and most of the new business that Oracle is hoping for will come from this deal with OpenAI.
In their Wednesday report, Moody’s analysts referred to the $300 billion in signed contracts but did not identify the particular customers. They did recognize that the contracts underscore the enormous growth potential for Oracle’s AI infrastructure business. Yet they also identified a number of risks.
One of the greatest alarms sounded by Moody’s is the “counterparty risk.” This is Oracle’s reliance on large contracts with few AI companies, and this makes their business model risky. Moody’s analysts pointed out that being heavily dependent on revenue from a few customers, such as OpenAI, can be dangerous.
Moody’s also had concerns regarding the increasing debt of Oracle. The debt of the company will grow at a quicker pace than its earnings before interest, taxes, depreciation, and amortization (EBITDA), resulting in a high level of leverage. Moody’s estimated that Oracle’s debt would be approximately four times greater than its EBITDA before it begins to earn sufficient amounts to repay its debt.
Secondly, the Moody’s analysts projected that Oracle would suffer through some period of negative cash flow before breaking even, which is another long-term risk to keep in mind.
Oracle is presently rated Baa2 at Moody’s, which is near the lower end of investment-grade credit ratings, i.e., a fairly secure investment, but not top-drawer.
Overall, while Oracle’s large AI deals with firms such as OpenAI hold a great deal of promise, they are also somewhat risky in terms of their dependency on a handful of big customers and increasing debt. Moody’s is closely monitoring the situation but has not altered Oracle’s rating yet.
