Oracle Corporation is being sued by a group of bondholders for filing a lawsuit on January 14, 2026 that alleges the company’s aggressive debt‑financed buildout of AI infrastructure has eroded the value of their holdings.
The lawsuit follows Oracle’s two‑stage debt campaign: a $18 billion bond issuance on September 25, 2025 and a subsequent $38 billion debt sale seven weeks later, bringing total new debt to $56 billion. The capital was earmarked for two data centers that will support a $300 billion, five‑year contract with OpenAI, a deal that represents a significant portion of Oracle’s backlog of $523 billion in remaining performance obligations.
Bondholders claim that Oracle’s offering documents were misleading and that the company failed to disclose its intention to raise substantial additional debt for the AI buildout. They argue that the rapid expansion of leverage has increased Oracle’s credit risk, a view that has been reflected in market data: bond prices fell, credit default swap spreads widened to levels not seen since the 2009 financial crisis, and Moody’s and S&P issued negative outlooks on the company’s rating.
Oracle’s management has acknowledged the scale of the investment. Executive Vice President and Principal Financial Officer noted that fiscal 2026 capital expenditures are expected to be about $15 billion higher than previously forecasted, while Chairman Larry Ellison emphasized that AI models reasoning on private data will become an even larger and more valuable business than public‑data models. The company has also highlighted the $300 billion OpenAI contract as a key tailwind that underpins its long‑term revenue growth.
The lawsuit and the accompanying market reaction underscore the tension between Oracle’s ambition to capture a share of the AI infrastructure race and the financial risk profile that accompanies such a large, debt‑backed investment. Investors are now weighing the potential upside of the OpenAI partnership against the headwinds of elevated leverage, construction delays, and the possibility of further rating downgrades. Oracle’s ability to service its debt and convert its backlog into profitable revenue will be closely monitored in the coming quarters.
The event is material and will likely influence long‑term investment models, as it signals a shift in Oracle’s capital structure and strategic focus toward AI, while also exposing the company to heightened credit risk and potential regulatory scrutiny.
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