Oracle will have to borrow at least $25B a year to fund AI fantasy, says analyst (www.theregister.com)

Analyst house KeyBanc warns that Oracle may need to borrow roughly $25 billion a year — about $100 billion over four years — to build the datacenter capacity tied to its reported $300 billion cloud-compute contract with OpenAI. The deal has already swollen Oracle’s remaining performance obligations to $455 billion (up 359% YoY) and sent shares higher, but KeyBanc and ratings firm Moody’s flag a financing gap: Oracle holds roughly $10B cash, $82.2B long-term debt (plus a recent $18B bond offering), $9B due within a year, and has seen free cash flow plunge 152% YoY as capex jumped to $8.5B in Q1 FY26 from $2.3B a year earlier. This matters because the arrangement ties two high-risk balance sheets together: OpenAI hasn’t yet turned a profit (annual recurring revenue ~ $10B, optimistic claim of $20B) and isn’t expected to be cash-flow positive until late this decade, yet Oracle would front massive infrastructure spending starting now with OpenAI payments not due until 2027. If capital markets balk or OpenAI can’t cover obligations, the buildout could leave large unpaid bills and create counterparty contagion — reinforcing concerns that debt-fueled AI buildouts are inflating a bubble similar to early internet excesses and posing systemic risk to the AI/cloud ecosystem.