Wall Street’s enthusiasm for Oracle’s aggressive AI expansion has cooled as concerns over debt and execution risks grow. Two months after a historic 36% stock surge—its best day since 1992—Oracle has lost about one-third of its market value, with the stock on track for its worst month since 2011. The rally was fueled by strong cloud infrastructure forecasts and Oracle’s deepening partnership with OpenAI, but investor confidence has eroded amid doubts about the sustainability of the AI boom. Analysts now warn that AI sentiment is fading. Jackson Ader of KeyBanc Capital Markets noted that among major cloud providers investing heavily in GPUs, Oracle is expected to generate the least free cash flow. To fund its ambitious AI infrastructure plans, Oracle is reportedly exploring a $38 billion debt raise, according to sources familiar with the matter. Bloomberg first reported the plan, which would help finance the construction of data centers across Texas, New Mexico, and Wisconsin, as well as the purchase of hundreds of thousands of GPUs from Nvidia and AMD. At its October AI World conference, Oracle’s cloud architecture was praised for scalability, and investors were energized by over $450 billion in signed contracts not yet recognized as revenue. But skepticism quickly followed. On October 17, shares dropped 7% as markets questioned whether Oracle could deliver on its bold 2030 target of $166 billion in cloud infrastructure revenue—up from $18 billion in fiscal 2026. Andrew Keches of Barclays downgraded Oracle’s debt, citing the company’s “significant funding needs” and a lack of clear path to improving its credit profile. He noted that off-balance sheet debt facilities and vendor financing may be necessary. Oracle’s 5-year credit default swaps have risen to a two-year high, signaling growing investor concern over default risk—though not yet alarm levels. Still, Oracle bulls point to founder Larry Ellison’s proven track record and resilience. An anonymous hedge fund manager told CNBC that Ellison is “someone you don’t want to bet against.” Rishi Jaluria of RBC Capital Markets believes Oracle could regain momentum with more AI deals but maintains a hold rating. Meanwhile, analysts like Gil Luria of D.A. Davidson argue that Oracle’s strategy reflects “bad behavior” in the AI buildout. Unlike Microsoft, Amazon, and Google, which have strong cash reserves and established customer bases, Oracle relies heavily on OpenAI—a high-growth but cash-burning startup. Luria also highlighted that GPU rental margins are far lower than Oracle’s core business, which enjoys roughly 80% margins. He believes the initial $100 stock surge following the earnings report was overblown and has now fully reversed. Barclays has advised clients to buy Oracle’s 5-year credit default swaps as a hedge. Oracle did not immediately respond to a request for comment. At the time, CEO Clay Magouyrk confidently affirmed OpenAI’s ability to meet its $60 billion annual commitment to Oracle, citing OpenAI’s rapid user growth. OpenAI’s Sam Altman recently projected the company will hit $20 billion in annualized revenue this year and reach hundreds of billions by 2030. Yet, for Oracle, the path to profitability remains uncertain amid rising debt and market skepticism.