Bondholders step back from Oracle's latest debt moves to support AI spending

The bond market is hammering Oracle this week after it was reported by Cryptopolitan that the company plans to stack another $38 billion onto its already massive debt load to build out more AI infrastructure, a move that stunned traders who were already watching its balance sheet swell past $104 billion.

That new borrowing plan hit the market at the exact moment investors were trying to figure out how far the company can push this strategy while spending more cash than it brings in from operations through deals with startups like OpenAI.

Bond traders said the impact showed up right away in the numbers. The company’s 2033 bonds with a 4.9% coupon slipped again this week, lifting yields by more than three basis points over the last two weeks.

The 2032 bonds with a 4.8% coupon also saw yields rise almost two basis points in one week. Those jumps marked the moment when questions about the safety of this plan moved out of private calls and into actual trading.

Analysts said the drop followed the CNBC report outlining the company’s plan to take on that additional $38 billion, which landed exactly when investors were trying to measure how deep this AI gamble could go.

Traders track new warnings from analysts and investors

Lisa Shalett, the chief investment officer of Morgan Stanley Wealth Management, told Reuters that major tech firms are trying to keep stock buybacks alive while pouring money into capex, and they are financing both at once by borrowing.

When Lisa said, “most of the major tech companies are trying to sustain their stock buyback programs at the same time that they’re spending on capex currently and to do that, they’re actually borrowing and so they’re using debt,” it matched what traders were seeing inside the bond screens all week.

Tim Horan, the chief investment officer for fixed income at Chilton Trust, told Reuters he sees the selloff as temporary.

Tim said, “I’m viewing this more as a bump in the road… I don’t think what Oracle is experiencing is symptomatic of a popping of some kind of bond market expensive bubble,” and added that the company has tools to handle obligations before touching dividends.

But his comments came while investors were comparing warnings from other well‑known voices who have taken aim at the way big tech firms report earnings while spending heavily on AI development.

Michael Burry, whose famous bets against the housing market in 2008 were shown in The Big Short, has argued that Oracle, Microsoft, and Alphabet’s Google are stretching out depreciation schedules to smooth out earnings as they commit money to AI.

He estimated that between 2026 and 2028, depreciation could be understated by $176 billion, lifting reported profits across the sector.

Michael Field, chief equity strategist for Morningstar in the Netherlands, told Reuters that the economic life of data centers is dropping fast.

He said it could soon be “low single‑digit years,” meaning gear could be obsolete in three to four years and companies would have only that window to make enough money to pay off the sites.

Family offices and hedge funds adjust positions during major stock swings

During the same period, filings showed that ultra‑wealthy family offices moved in completely different directions on Oracle.

Documents filed for the quarter ending Sept. 30 showed that two investment firms linked to the Rausing family of Sweden and another tied to Microsoft co‑founder Paul Allen boosted their stakes as the company recorded its biggest one‑day stock gain since 1992.

That jump happened after the company offered a strong outlook for its cloud business, which also helped Larry Ellison briefly become the richest person in the world as his wealth rose by $89 billion in a single day.

But hedge fund billionaire David Tepper and duty‑free tycoon Alan Parker went the other way. David’s firm, Appaloosa LP, sold its entire position worth $32.8 million, while Alan also cut his holdings.

Those exits landed before the company’s shares tumbled about 30%, a drop that added even more weight to the current bond selloff now shaking investors who are tracking these swings across the crypto‑heavy, AI‑driven market landscape of 2025.

Money managers with more than $100 million in U.S. equities must file 13F forms within 45 days of each quarter’s end, giving the public one of the only real looks into how hedge funds and large family offices position themselves during volatile periods like this one for Oracle, where debt levels, AI spending, and stock performance are pulling in different directions at the same time.

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