The credit risk associated with debt from Oracle, the global leader in database management systems and enterprise artificial intelligence solutions, has reached a record high amid investor concerns about its massive spending on AI and its ability to generate sufficient returns from these investments.

Investering, a platform specializing in economic analytics, stated that Oracle is pouring billions of dollars into data centers and infrastructure to meet the growing demand for AI-related computing, which has negatively impacted its cash flows.

This coincides with S&P Global Ratings' downgrade of Oracle's credit rating to 'BBB', the lowest level within the investment-grade category, due to previous underestimations of the company’s spending needs to expand its AI business.

The increased cost of insuring the company's debt reflects investors' growing concerns about its ability to meet its financial obligations.

These developments come amid broader pressure on the technology sector following the launch of an AI model by a Chinese startup that has raised concerns about increasing competition for major US companies like OpenAI, leading to renewed questions about whether massive investments in AI infrastructure will provide sufficient financial returns, especially as Oracle continues to expand into cloud computing, data centers, and advanced chips.