S&P cuts Oracle rating as OpenAI bet becomes a $638B gamble

Oracle’s AI moonshot just got a credit downgrade, and the culprit isn’t some abstract market jitter — it’s OpenAI. S&P Global dropped Oracle’s rating from BBB to BBB-, one step above junk, explicitly naming OpenAI as a “key credit risk.” The numbers behind that call are staggering. Oracle’s capital spending is now projected to hit $95 billion by 2027, up from a previous estimate of $60 billion. Meanwhile, the revenue to justify those outlays remains a distant promise. Roughly half of Oracle’s $638 billion in contractual obligations are tied to OpenAI. If Sam Altman’s company falters, Oracle is left holding a bag full of data center capacity with no obvious tenant to fill it.

S&P’s analysts didn’t mince words about the competitive landscape either. They see Oracle in a more precarious position than AWS, Google, or Microsoft. Those hyperscalers have massive internal workloads — their own services, their own products — that can soak up excess infrastructure if demand cools. Oracle doesn’t have that safety net. Still, the report notes that even the Big Three cloud providers would feel real pain if OpenAI imploded. The entire sector has tethered itself, to varying degrees, to a single company whose financials remain opaque.

That opacity is causing problems elsewhere in the funding pipeline. SoftBank reportedly tried to syndicate a loan backed by OpenAI shares and got a cold shoulder from lenders. The original $10 billion target was slashed to $6 billion because banks couldn’t get comfortable valuing a private company with no clear path to liquidity. OpenAI has quietly pushed its expected IPO out to 2027, which means investors are being asked to wait even longer for an exit.

The whole situation raises an uncomfortable question: what happens if the AI revenue boom everyone’s banking on arrives late — or not at all? Oracle has bet the farm on a single, high-risk counterparty. For a company of Oracle’s size and history, that’s an unusually concentrated gamble. S&P’s downgrade is essentially a warning flare that the market may be underpricing just how much of Oracle’s future is riding on OpenAI’s ability to turn chatbots into cash.