S&P downgrades Oracle's rating to BBB-, just one step away from junk status

Glonghui July 10｜S&P has downgraded Oracle’s long-term issuer credit rating from BBB to BBB-, while maintaining a stable outlook. This means Oracle is now just one notch above junk status. The downgrade reflects the ongoing structural risk resulting from Oracle’s heavy investment in artificial intelligence infrastructure. The rating agency currently expects Oracle’s capital expenditure for fiscal year 2027 to soar to $90 billion to $95 billion, far exceeding the previous forecast of $60 billion, primarily driven by the procurement of AI chips and the construction of new data centers. The free operating cash flow shortfall for fiscal year 2027 is expected to widen to negative $42 billion, almost double the previously predicted shortfall of $24 billion.