Technology company Oracle Corporation (ORCL) is back in the spotlight as concerns rise in the credit market. A new report from Morgan Stanley analysts Lindsay Tyler and David Hamburger warns that investors are growing cautious about Oracle’s large spending tied to artificial intelligence and data centers.
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Credit Protection Costs Hit a Three-Year High
The cost to insure Oracle’s debt, measured through five-year credit default swaps (CDS), climbed to 1.25 percentage points in November. Morgan Stanley said this level could soon move above 1.5 points, and possibly approach 2 points next year if Oracle does not give clearer details on how it plans to fund its AI expansion.
That would put risk levels close to those seen during the 2008 financial crisis, when Oracle CDS last peaked.
Rising Debt Sparks Concerns
Oracle has been spending heavily to support its AI and data center plans. In recent months, the company raised $18 billion in the bond market. It has also been linked to large financing deals for new data centers, including an $18 billion project loan in New Mexico and a $38 billion loan package tied to sites in Texas and Wisconsin.
According to Morgan Stanley, this surge in borrowing is creating uncertainty and leading more investors to hedge, which is pushing CDS prices higher.
All Eyes on December Guidance
Oracle is expected to announce its results for the second quarter of FY26 on December 15. Wall Street analysts expect the company to report earnings of $1.64 per share on revenues of $16.20 billion.
Morgan Stanley believes the upcoming earnings call will be important, as investors look for a clear plan on how the company will fund its AI buildout and data center pipeline, including the Stargate project.
For now, the firm contends the safer approach is to buy credit protection, rather than Oracle bonds, until the company offers more clarity on its financing plans.
Is ORCL Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ORCL stock based on 19 Buys and eight Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average ORCL price target of $364.91 per share implies 78.04% upside potential.
