Larry Ellison staked Oracle on OpenAI and now Wall Street is asking what happens if he's wrong

Oracle Corp.'s credit rating was cut to BBB- by S&P Global Ratings on July 9, 2026, and its stock has fallen more than 60% from its September 2025 high, as investors question whether the company's massive AI infrastructure bet on OpenAI can pay off. Oracle's remaining performance obligations reached $638 billion, with more than half attributed to OpenAI, but capital expenditures rose 162% to $55.7 billion in fiscal 2026 and free cash flow fell to negative $23.7 billion. Larry Ellison, Oracle's chairman, has become the clearest test of whether the AI infrastructure boom can justify its costs.

Oracle's credit downgrade, cash burn and OpenAI exposure have made Larry Ellison the clearest test of whether the AI infrastructure boom can pay for itself. On September 10, 2025, Larry Ellison briefly became the richest person on earth. Oracle had just reported numbers that sent its shares up 36% by the close, and Bloomberg's billionaires index put Ellison's fortune at about $393 billion during the surge. It lasted hours. Elon Musk moved back ahead, Oracle's shares later gave up much of that rise, and the story turned from billionaire scoreboard to balance-sheet stress. The latest pressure is not theoretical. S&P Global Ratings cut Oracle's long-term credit rating to BBB- on July 9, 2026, leaving it one notch above speculative grade. The stock has traded more than 60% below its September 2025 high, according to The Motley Fool, and investors are no longer treating Oracle's AI backlog as clean proof of future riches. They are asking who pays for the concrete, chips, power and leases before the revenue arrives. The answer starts with OpenAI. Bloomberg reported in December that Oracle's roughly $300 billion compute deal with OpenAI had become one of the largest cloud commitments ever signed. Oracle itself said remaining performance obligations reached $638 billion at the end of its fiscal fourth quarter, up 363% from a year earlier, while Bank of America analysts have attributed more than half of that backlog to OpenAI. That is a lot of future revenue tied to one customer that is still burning cash. S&P's concern is plain. If OpenAI has trouble raising money or meeting its contracts, Oracle could be left with data center obligations built for demand that doesn't show up on schedule. Capital expenditure rose 162% to $55.7 billion in Oracle's fiscal year ended May 31, 2026, and free cash flow fell to negative $23.7 billion, according to Oracle's own earnings release. S&P has projected a free operating cash flow deficit of about $42 billion in fiscal 2027, with capital spending expected to climb again. Debt is doing more work now. Oracle raised $43 billion in debt financing and $5 billion in equity financing during fiscal 2026. For fiscal 2027, the company said it expects to raise about $40 billion through debt and equity, including a previously announced $20 billion at-the-market equity issuance, while also saying it doesn't expect to issue additional debt in calendar 2026. That distinction matters. Bondholders hear one thing, shareholders hear another: someone is funding the buildout. CNBC reported in late June that Oracle had suffered its worst week since the 2001 dot-com bust as the stock fell 19% in five trading days. Computing, citing Bloomberg index data, noted that Oracle ranked second only to Amazon among non-financial issuers in the Bloomberg US Corporate Bond Index, with roughly $117 billion of debt outstanding. The company had nearly $130 billion in total borrowings at the end of fiscal 2026. Those are not startup numbers. They are systemically large numbers attached to a very concentrated AI bet. None of this means the Stargate site in Abilene, Texas is empty. It isn't. OpenAI said in July 2025 that parts of Stargate I were already up and running, with Oracle delivering Nvidia GB200 racks and early training and inference workloads beginning at the site. The broader Oracle partnership added 4.5 gigawatts of planned U.S. Stargate capacity, bringing OpenAI's announced total with Abilene to more than 5 gigawatts under development. Why Ellison is the face of this bet Ellison leaned into the moment publicly. He stood at the White House on January 21, 2025, beside Sam Altman and SoftBank's Masayoshi Son as President Donald Trump announced the $500 billion Stargate plan. Oracle later told investors that cloud infrastructure revenue could grow from $10.3 billion in fiscal 2025 to $144 billion in fiscal 2030. You don't get that path without OpenAI and other frontier AI customers taking huge amounts of capacity. Microsoft and Amazon can absorb AI spending with bigger cushions. Microsoft's quarterly revenue was $82.9 billion in its latest reported quarter, and Amazon's was $182 billion. Oracle's latest quarterly revenue was $19.2 billion, with GAAP net income of $4.2 billion. The gap is obvious. Oracle is making a hyperscaler-sized infrastructure bet without a hyperscaler-sized margin for error. Frankly, the circular structure is the part investors should keep staring at. Oracle builds capacity for OpenAI. OpenAI's ability to pay depends on capital markets, revenue growth and investor belief in future AI demand. Oracle's valuation depends on those OpenAI commitments turning into cash. If one link weakens, the pressure doesn't stay neatly in one place. Ellison may be right. Demand for AI compute is real, and Oracle has put itself closer to the center of that demand than almost anyone expected two years ago. But being early with borrowed money is different from being right with spare cash. His time as the world's richest person lasted a morning. Oracle's debt load will last longer. Also read: Moonshot AI's Kimi K3 runs on 20,000 Nvidia chips through Alibaba as Washington alleges export control breach https://startupfortune.com/moonshot-ais-kimi-k3-runs-on-20000-nvidia-chips-through-alibaba-as-washington-alleges-export-control-breach/ • OpenAI slashes GPT-5.6 Luna prices by 80% as Chinese rivals rewrite the AI cost equation https://startupfortune.com/openai-slashes-gpt-56-luna-prices-by-80-as-chinese-rivals-rewrite-the-ai-cost-equation/ • Scale AI names Francis deSouza as CEO to drive its enterprise and government AI push https://startupfortune.com/scale-ai-names-francis-desouza-as-ceo-to-drive-its-enterprise-and-government-ai-push/