Oracle’s $300B OpenAI bet has wiped $315B off its market value. Investors question the debt-fueled strategy as the company bets everything on one risky customer.
When Oracle announced its $300 billion partnership with OpenAI in September, Wall Street threw a party. The stock surged 36%- Oracle’s best day since 1992. Four months later, the market has erased $315 billion in value from the company, leaving a $74 billion net loss on the entire deal.
The so-called “Curse of ChatGPT” just became very real.
Here’s what galls investors: this isn’t a market-wide collapse. The Nasdaq, Microsoft, and the Dow Jones Software Index barely budged. Oracle got singled out. The company didn’t get punished for participating in AI- it got punished for betting its future on a single customer.
Oracle poured billions into a deal built on credit, hoping it could become OpenAI’s most vital infrastructure partner. Except Oracle isn’t flush like Microsoft or Amazon. It’s borrowing heavily to build data centers and purchase hundreds of thousands of Nvidia GPUs. Net debt has more than doubled since 2021 and now sits at 2.5 times EBITDA. Cash flow remains negative. The company’s credit-default swap costs hit a three-year high.
The plan sounds bold- hit $166 billion in cloud revenue by 2030, with OpenAI becoming the top revenue driver by 2027.
The execution?
Aggressive capex rising from $35 billion today to $80 billion annually by 2029. All financed by debt.
The market’s verdict is brutal but logical. Oracle isn’t diversified. It’s dependent. The entire business model is now tied to one customer and one moonshot mission: artificial general intelligence. If OpenAI stumbles, so does Oracle’s entire balance sheet.
The OpenAI hype cycle has turned. Broadcom and Amazon also fell after announcing partnerships. Even Nvidia barely moved. The participation trophy era of AI deals is dead. Wall Street now demands results, not promises.
Oracle’s trapped.
With $455 billion in remaining performance obligations, backing out isn’t an option. The company must throw good money after bad, betting that OpenAI’s AGI dream actually materializes. The market isn’t convinced. And neither should you be..
