Markets are getting more concerned about Oracle's AI data center debt (sherwood.news)

Markets are signaling rising worry about the cost and sustainability of the AI data-center buildout, with the price of credit-default swaps (CDS) protecting against an Oracle bond default surging sharply since September. That CDS spike — even after a brief dip — shows investors increasingly skeptical about Oracle’s ability to fund massive AI capex without heavy cash burn. Wall Street’s forecast for Oracle’s free cash flow has swung dramatically (from an expected +$25 billion in 2028 to an anticipated -$25 billion), helping explain why Oracle’s default insurance is now pricier than for other hyperscalers and why concern is spilling over to otherwise solid names like Microsoft. The shift matters for AI/ML because it signals tighter financing conditions for the multi-year, capital-intensive rollout of GPU farms and custom silicon, potentially slowing deployments or raising returns investors demand. The bond-market stress coincides with equity volatility — reports of an Alphabet–Meta chip partnership are already weighing on Nvidia and AMD — underlining how partnerships, supplier exposure, and investor positions are interlinked across the AI ecosystem. In short, markets are moving from AI euphoria toward a more realistic assessment of financing risk, cash burn, and the timeline for profitable AI infrastructure scaling.