In the dusty plains of West Texas, bulldozers are carving out what will soon become one of the largest AI supercomputer campuses ever built. The 4.5-gigawatt site, quietly rising under the codename “Project Stargate,” is Oracle’s crown jewel in a $500 billion gamble that Larry Ellison hopes will catapult the 48-year-old database giant past Amazon, Microsoft, and Google in the race for artificial-intelligence supremacy.
The price tag for that ambition is already north of $100 billion — and it is almost entirely borrowed.
From Cash Cow to Debt Mountain
Just five years ago, Oracle was the poster child for conservative corporate finance. It generated piles of free cash flow, bought back billions in stock, and carried a modest $55 billion in debt. Today, the picture is unrecognizable.
- Total debt (including leases): $104–111 billion
- Long-term debt alone: $85.3 billion
- Debt-to-equity ratio: 5.2× (Microsoft’s is 0.4×)
- Net debt-to-EBITDA: ~4×
- Free cash flow (TTM): –$5.9 billion (worst in 23 years)
- Credit-default-swap spread: 128 bps — highest since the 2009 financial crisis
In September 2025, Oracle tapped the bond market for $18 billion, including a rare 40-year tranche. Investors, hungry for yield in a high-rate world, snapped it up — but only after demanding the fattest spreads Oracle has paid in over a decade.
Why Borrow So Much?
Because the AI land-grab waits for no one.
Oracle is racing to build the physical infrastructure required to power the next generation of large language models. The company has already locked in some of the biggest contracts in tech history:
- A five-year, $300 billion cloud-and-compute deal with OpenAI (starting 2027)
- Multi-year GPU commitments with Meta, xAI, and several sovereign governments
- Remaining Performance Obligations (RPO) exceeding $450 billion — more than triple the figure from two years ago
To fulfill those contracts, Oracle is spending at a blistering pace:
| Fiscal Year | CapEx | YoY Growth |
|---|---|---|
| 2024 | $6.9B | – |
| 2025 | $21.2B | +207% |
| 2026 (guidance) | ~$35B | +65% |
Management now admits that capital expenditures will consume 90–100 % of operating cash flow for the foreseeable future — before dividends and buybacks.
The Stargate Supercluster
The most visible symbol of Oracle’s ambitions is the Stargate joint venture with OpenAI and SoftBank. Announced by President Trump in January 2025, the initiative aims to deploy up to 10 gigawatts of AI compute across the United States by 2030.
Oracle’s share alone — 4.5 GW — is larger than the entire current capacity of most cloud providers outside the Big Three. The company has already broken ground on massive campuses in Texas, New Mexico, Wisconsin, and Arizona, each designed to house clusters of up to 131,072 NVIDIA Blackwell GPUs cooled by direct liquid systems.
The Bull Case
Bulls argue the debt is an investment, not a liability.
Ellison and CEO Safra Catz repeatedly point out that Oracle’s cloud revenue is growing 50 %+ annually, with infrastructure-as-a-service (IaaS) up 52 % last quarter. If the company captures even a modest slice of the projected $600 billion enterprise AI cloud market by 2030, today’s leverage will look prescient.
“These are 15- to 20-year assets,” Catz told analysts in September. “We are front-loading the expense to match contracts that are already signed and payable over decades.”
The Bear Case
Bears see a classic capital-misallocation story in the making.
OpenAI itself is burning $15–20 billion per year and has only $10–12 billion in annualized revenue. If the economics of frontier models deteriorate — or if cheaper, smaller models eat into demand for giant clusters — Oracle could be left with hundreds of billions in stranded assets and crushing interest payments.
Moody’s, Barclays, and JPMorgan have all issued warnings in recent months. Barclays now projects a funding gap by fiscal 2027 unless Oracle dramatically slows spending or raises equity (something Ellison has historically loathed).
The Verdict Hanging Over Q3 Earnings
The market will get its next clue when Oracle reports fiscal Q3 results in mid-December. Analysts will be laser-focused on three numbers:
- Size of the new CapEx guidance
- Growth in Remaining Performance Obligations
- Any update on off-balance-sheet or vendor-financing arrangements
For now, Oracle stock trades 33 % off its September peak, as if the market can’t decide whether it’s buying the next AWS — or the next WeWork.
One thing is certain: Larry Ellison is all-in. Whether the house wins or the debt finally topples the oracle remains the biggest open question in enterprise tech.