AI Dreams, Jumbo Debt, And A Stock That Forgot It Was Up 30%

Monster backlog, jumbo bond deals, and a share price that just took a 37% round trip. This is what happens when the market loves your AI story and then suddenly remembers the bill.

Author

Noah Zelvis
December 10, 2025

You do not need to read every bond prospectus or model every data center to follow this one. Think about three things instead: how much future revenue is already locked in, how the company plans to pay for all the concrete and GPUs it keeps ordering, and whether today’s stock price assumes an AI fairy tale or just a normal, slightly stressed growth story.

AI Momentum (Sponsored)

A rapid acceleration in AI deployment across the U.S. is creating fresh opportunities for forward-looking investors.

A free breakdown uncovers 9 companies demonstrating measurable growth and deep alignment with this next wave of AI demand.

These aren’t speculative plays—they are firms with proven traction and expanding AI footprints. 

Early movers may see the greatest advantage.

Download the Free Report

What Just Happened

Oracle (ORCL) has had a year that looks like a meme stock drew the chart.

  • Up ~33% year to date

  • Down ~37% from a mid-September high near $346 to the low $200s

  • Now trying to stabilize in the low $220s ahead of earnings

The big mood swing started after the company went all-in on AI infrastructure.

Key plot points:

  • A headline $300B compute deal with OpenAI over about five years starting in 2027

  • Remaining performance obligations (RPO) jumping 359% to ~$455B and expected to push past $500B

  • An $18B jumbo bond sale in September and total debt climbing to about $112B while cash sits near $10B

  • Credit default swaps (insurance against default) ripping higher as bond investors hedge their nerves

Earnings on Dec 10 are the next test. Street numbers call for roughly $1.64 in EPS (up ~12%) on about $16.2B in revenue (up ~15%).

That is solid on paper. The question is whether that feels big enough to justify the AI build-out and the balance sheet diet plan.

Never Miss Our Top Tech Recommendations Again!

We now send our tech picks via text, too, so you’ll get the same tech breakout news without having to open your inbox.

The Strategy

Under all the acronyms, the game plan is pretty simple.

  • Turn Oracle Cloud Infrastructure into one of the main places where AI labs and big companies run high-density workloads

  • Lock in massive, multi-year contracts with anchor customers like OpenAI, xAI, and Cohere

  • Use that backlog to fund a wave of data centers, including mega-sites in New Mexico and Wisconsin

  • Lean on the old high-margin database and software business to keep cash flowing while the new stuff ramps

Think of it as a classic old software plus new pipes story. One side throws off cash, the other side burns cash now in hopes of much bigger cash later.

If it works, Oracle graduates from legacy database name your parents used to one of the core landlords of AI compute.

Market Movers (Sponsored)

After reviewing thousands of companies, analysts isolated the 5 Stocks Set to Double based on accelerating performance, improving fundamentals, and strong technical signals.

This newly released report breaks down why these five picks may be positioned for significant moves in the coming year.

While results cannot be guaranteed, past reports uncovered gains reaching +175%, +498%, and +673%.

Access is free until midnight.

See the 5 Stocks Set to Double. Free Access.

*This free resource is being sent by Zacks. We identify investment resources you may choose to use in making your own decisions. Use of this resource is subject to the Zacks Terms of Service.
*Past performance is no guarantee of future results. Investing involves risk. This material does not constitute investment, legal, accounting, or tax advice. Zacks Investment Research is not a licensed dealer, broker, or investment adviser.

Poll: What makes you second-guess a “good deal”?

Login or Subscribe to participate in polls.

Why The Stock Got Smoked Anyway

If the backlog is exploding and hyperscalers are lining up, why did the stock just lose almost 40% of its value in three months?

A few simple reasons:

  • Debt math suddenly matters
    The company is now one of the biggest non-financial investment-grade borrowers, with analysts expecting another $20–30B in debt each year for a while. That is a lot of leverage to stack on for a story that is still in the promise phase.

  • Free cash flow has not caught up yet
    The data centers and nuclear-adjacent power dreams look impressive, but they are not yet throwing off cash at a rate that calms bond investors.

  • Credit market vibes turned sour
    Five-year CDS spreads moved to multi-year highs as investors bought protection. When debt holders start paying up to hedge, equity holders get jumpy fast.

  • Concentration risk is loud
    A huge chunk of the future AI revenue story rides on one logo. OpenAI is a very shiny logo, but it is still just one customer.

  • AI bubble chatter is back
    After a long run where anything with AI in the deck got rewarded, people are now asking awkward questions about financing, returns, and timelines.

None of this says the thesis is broken. It just means the market went from AI rocket ship to show me the receipts in record time.

Actionable Picks (Sponsored)

We’re sharing a free copy of our brand-new report: 7 Best Stocks for the Next 30 Days.

For decades, our objective, mathematical stock prediction system has delivered market-beating results, identifying trades with exceptional potential.

This report uncovers the 7 highest-potential stocks from our top-rated selections — fewer than 5% of all stocks qualify.

These could be the most exciting short-term trades in your portfolio.

Act now — download your free copy and be ready for the next move.

[Get the Free Report]

*This free resource is being sent by Zacks. We identify investment resources you may choose to use in making your own decisions. Use of this resource is subject to the Zacks Terms of Service.
*Past performance is no guarantee of future results. Investing involves risk. This material does not constitute investment, legal, accounting, or tax advice. Zacks Investment Research is not a licensed dealer, broker, or investment adviser.

The Good Stuff You Can Actually Like

  • Backlog that is not made up
    RPO pushing past $500B is not a vibes number. It is contracted revenue that has not hit the income statement yet. If Oracle keeps converting that into real sales on schedule, it gives a long runway for growth.

  • Discount versus the usual suspects
    The forward P/E has fallen from above 40x to around the high-20s. That is still not cheap in absolute terms, but it is now below Microsoft and in line with some big software names rather than priced like a pure AI lottery ticket.

  • Cloud growth that is actually fast
    Oracle Cloud Infrastructure is expected to grow north of 70% this fiscal year. That is chasing the leaders speed, not coasting on maintenance renewals.

  • Wall Street is nervous but not out
    A big chunk of analysts still rate the stock a Buy. Mizuho, Bernstein, Barclays and others see the pullback as a chance to get in, with some targets in the $330–$400 range, implying chunky upside if the story re-rates.

Financing options beyond straight debt
Management can lean on vendor financing, capital leases, off-balance sheet structures, and possibly sovereign or partner capital. Oracle does not have to fund every watt the same way.

The Rub You Should Respect

  • Leverage is not a rounding error
    Over $100B of total debt with plans to raise $20–30B per year for several years is a serious commitment. If the macro backdrop turns or AI demand slows, that leverage becomes a real constraint.

  • Backlog does not pay coupons by itself
    RPO is great, but bondholders get paid in cash, not slides. If revenue and free cash flow do not ramp fast enough, the balance sheet story gets tight.

  • Customer risk is real, not theoretical
    A $300B OpenAI deal sounds fantastic. It also means one partner’s model wars, regulatory headaches, or funding issues can spill back into your narrative.

  • AI infra is brutally capital-intensive
    Building data centers at this scale is not like spinning up a SaaS module. Everything is expensive, takes years, and depends on regulators, utilities, and chip supply.

Sentiment swings cut both ways
The same crowd that cheered RPO up 359% and sent the stock soaring in September is now focused almost entirely on debt and CDS. That can keep volatility high even if fundamentals trend in the right direction.

What The Next 3–4 Quarters Are Really About

In the near term, this is less about beating EPS by a penny and more about proving that the AI megaprojects are on a sane path.

Things that will matter:

  • RPO growth staying strong without stretching deployment timelines

  • Cloud and AI revenue growing fast enough to make capex look justified

  • Free cash flow trending up, not flatlining under the weight of new build-outs

  • Clear, believable guidance on how future data centers are funded

  • Early signs that customer mix is broadening beyond the biggest AI labs

If those show up, the last three months start to look more like a violent reset than a long-term verdict.

How I Would Frame A Position

  • For current holders
    This still looks like a prove-it phase, not an emergency. If you bought into the AI landlord thesis and sized it reasonably, the case for holding while you wait for clarity is defensible.

  • For new money
    The pullback finally gives you something close to a normal risk-reward instead of a priced for perfection setup. A starter position makes sense if you accept higher volatility and are willing to watch balance-sheet metrics, not just headlines.

  • For anyone allergic to leverage
    This probably is not your cleanest AI play. There are simpler ways to get AI exposure if debt makes you lose sleep.

Action Recap

✅ Starter: Reasonable if you want AI infrastructure exposure and can live with debt-plus-volatility.
✅ Add On Proof: Consider adding only if earnings show strong revenue conversion from backlog and improving free cash flow while debt stays manageable.
⚠️ Trim On Trouble: If RPO grows but revenue and cash lag, or if funding starts to lean on dilutive options and expensive credit, treat the bounce as a chance to lighten up.

That's our coverage for today; thanks for reading! Reply to this email with feedback or any tech stocks you want me to check out.

Best Regards,
—Noah Zelvis
Tech Stock Insider