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Moody’s Ratings Flags Significant ‘Counterparty Risk’ For Oracle Corporation Following Its $300 Billion OpenAI Contract

Oracle Corporation (NYSE:ORCL) is one of the 10 Best AI Stocks to Buy According to Goldman Sachs. On September 17, Moody’s Ratings flagged significant ‘counterparty risk’ for Oracle Corporation (NYSE:ORCL) following its $300 billion AI contract with OpenAI.

Oracle is set to provide 4.5 gigawatts of compute to OpenAI over the next five years, which Moody’s sees as overwhelming for the company. The credit rating agency believes that this deal has tremendous potential for Oracle’s AI infrastructure business. But Moody’s also pointed out Oracle’s pipeline isn’t swelling; it is locking in. Moody’s has lowered the credit rating outlook to negative from stable, issuing a rating of Baa2, which is at the lower end of investment-grade credit ratings.

Ken Wolter/shutterstock.com

“Counterparty risk is always a key consideration in any type of project financing, particularly where there is a high reliance on revenue from a single counterparty. And in our view, Oracle’s data center build is effectively one of, if not the world’s largest, project financing,” according to Moody’s analyst.

The analyst also noted that the company’s debt will increase faster than its EBITDA, which could add to a forecast high leverage of 4x before Oracle’s EBITDA begins to surpass its debt.

“It is likely that free cash flow will also be negative for an extended period before reaching breakeven,” the analyst added.

The rating agency specifically highlighted the growing counterparty risk with Oracle, relying on major commitments from a small number of AI companies to fund its business model.

Since the Moody’s credit rating downgrade, Oracle Corporation (NYSE:ORCL) shares have plunged over 6.65% as of September 23.

Oracle Corporation (NYSE:ORCL) is a leading provider of integrated suites of applications, including secure, autonomous infrastructure in the Oracle Cloud. The company’s Oracle Cloud Infrastructure for AI computing is offering AI-powered applications and services.

While we acknowledge the potential of ORCL to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than ORCL and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

A few years from now, you’ll wish you’d owned this stock.

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Dr. Inan Dogan

Dr. Ian Dogan

Co-Founder and Research Director at Insider Monkey

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