S&P downgrades Oracle to BBB – only one notch above junk level
S&P Global has downgraded Oracle's rating due to massive AI investments. The company is now only one notch away from the speculative territory.
Rating agency S&P Global has lowered Oracle's creditworthiness from BBB to BBB- – this is the lowest notch in the so-called investment-grade area. A further downgrade would push the database company into speculative territory. However, the outlook remains stable according to S&P.
The rating agency attributes the downgrade , published on July 9, to Oracle's rapidly growing AI infrastructure business, which is massively increasing the company's debt and capital requirements. S&P had already set the outlook for Oracle to “negative” in July 2025, warning of precisely this scenario.
95 billion dollars in investments, 42 billion deficit
According to S&P, the core of the problem is Oracle's enormous investments in expanding AI data centers. S&P forecasts a deficit in free operating cash flow of almost 42 billion US dollars for the 2027 fiscal year. The rating agency expects Oracle to finance this deficit with a mix of debt and equity.
For the 2027 fiscal year, which ends in May next year, Oracle had raised its spending forecast to 90 to 95 billion US dollars – S&P had previously only assumed 60 billion. The analysts suspect rising component costs, such as for GPUs and network equipment, as the reason.