Oracle’s $300B AI Gamble Backfires as Bondholders Sue Over Misleading Debt Claims

Oracle’s $300 billion AI gamble just left bondholders scrambling as a $38 billion debt surprise crashed bond prices—turning a tech titan’s debt into junk-like paper losses.

Investors filed a class-action lawsuit alleging Oracle misled them about its OpenAI data center funding. The suit claims executives falsely stated they “may” need additional loans while secretly planning a $38 billion bond issuance just two months after a $18 billion loan. Original bonds now trade at junk-like valuations, with investors reportedly sitting on $1.3 billion in paper losses.

The lawsuit notes the bond market’s reaction to Oracle’s additional debt was swift and bracing:

"The bond market’s reaction to Oracle’s additional debt was swift and bracing"

Oracle remains investment-grade (BBB/Baa2) but is on negative watch by S&P and Moody’s. Analysts warn that AI infrastructure costs demand sustained billions in funding, creating systemic risk for smaller firms reliant on debt.

The case names Oracle executives, underwriting banks, and cites violations of the 1933 Securities Act.