"Moody's said late last week that the OpenAI "contract size is staggering - highlighting the tremendous potential for Oracle's AI Infrastructure. However, the related risks of the build are significant." It pointed to the significant "counterparty risk" in Oracle's projected growth - the possibility that another party fails to meet its obligations. "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," Moody's analysts wrote on Wednesday."
""The scale and speed of the entry into the standalone AI infrastructure business is unprecedented in Oracle's history and introduces a new business model very different from the core software business," said Moody's analyst Jones further. He added: "though ratings are not affected at this early stage, the speed of the change, and potential scale of investment particularly as the AI industry is still evolving, introduce an overhang to the ratings.""
Moody's flagged significant risks tied to Oracle's $300 billion agreement with OpenAI and a broader $455 billion pipeline of cloud infrastructure obligations. Oracle's share price rose 27% after demand for racks from AI model builders. Moody's emphasized counterparty risk where heavy reliance on a single customer could jeopardize projected revenue if obligations are unmet. OpenAI has not yet secured all committed funding, raising uncertainty. Oracle's existing debt and the large capital expenditures required for AI infrastructure compound financial risk. Moody's noted the scale and speed of entry into standalone AI infrastructure is unprecedented for Oracle and could overhang ratings.
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