Oracle's credit risk hits a record as the market frets over debt tied to its AI bet

Oracle's credit risk has hit an all-time high: default insurance on its debt now costs more than at the peak of the 2008 crisis. For the market, it signals that the company's multibillion-dollar AI expansion looks increasingly risky, despite the rapid growth of its cloud business.

Why the market is nervous

On March 27, 2026, the cost of five-year default insurance on Oracle's debt rose 7.2 basis points and closed at 198.18 basis points. That is above the previous peak of December 2008.

The figure does not mean the market expects immediate trouble at the company. It does show that investors are demanding an ever larger risk premium on Oracle's debt securities. Nerves were further frayed by rising oil prices and a slide in stocks, which made attitudes toward capital-intensive AI bets even harsher.

In effect, Oracle's CDS has become a gauge of how Wall Street views the debt side of the AI boom. The more expensive the protection, the greater the doubt that the company can quickly turn huge investments in data centers, GPUs and new capacity into steady cash flow. Investors are no longer debating whether demand for AI infrastructure exists, but how safe it is to finance this race with debt and how many years the market is willing to wait for a payoff.

Where the debt load came from

Oracle chose the aggressive growth scenario itself. In February 2026, the company announced that it plans to raise $45 billion to $50 billion through debt and equity during the calendar year, to expand Oracle Cloud Infrastructure to serve demand from large customers that is already under contract. The projects are large-scale and include work for AMD, Meta, NVIDIA, OpenAI, TikTok, xAI and other customers. A few days after the announcement, Oracle had already raised $30 billion through investment-grade bonds and mandatory convertible preferred securities.

• 2026 financing plan: $45–50 billion
• Already raised: $30 billion
• Contracted obligations backlog: $553 billion, up 325% year over year
• Oracle's FY2026 capital expenditure forecast: $50 billion

The problem is that the market sees not only future revenue but also the scale of obligations today. Oracle says that for some of its new AI contracts it will not need additional funding: customers pay for equipment in advance or supply the GPUs themselves. Management also said it does not expect new bond issuance beyond the 2026 plan already announced. Yet even these explanations do not settle the question: will the current financing scheme be enough if capacity rollout, demand and margins do not go exactly to plan?

Growth is there, trust is thinner

On the operating side, Oracle does not look weak. In the third quarter of FY2026, revenue rose 22% to $17.2 billion, cloud revenue rose 44% to $8.9 billion, and the IaaS infrastructure segment jumped 84% to $4.9 billion. The backlog of future contract obligations reached $553 billion, and the company raised its FY2027 revenue target to $90 billion. So the market does see demand for Oracle's capacity.

But the credit market is looking at the other side of the story. Until future contracts and forecasts turn into cash actually received, investors keep pricing in a premium for high debt, expensive infrastructure and a long payback horizon. That is why even strong operating metrics do not stop default insurance from setting new records. For Oracle, this is no longer just a question of business growth, but of trust in how that growth is being financed.

What it means

Oracle's story shows that in 2026 the market judges the AI race not only by revenue and the number of contracts, but also by the cost of capital. If even a company of Oracle's size faces record-priced debt insurance, investors are starting to scrutinize more strictly the whole thesis that huge AI infrastructure spending will automatically pay off.

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