Analysts: Oracle faces AI bubble concerns, with debt risk being particularly worrying.

PANews , December 10th - Three months ago, Oracle (ORCL.N)'s strong earnings outlook propelled its stock to its best single-day performance in 30 years, but just one quarter later, the situation for the company and the entire AI sector is vastly different. Oracle will release its earnings report after the market closes, and its stock price has plummeted 33% since hitting an all-time high on September 10th. The AI company is facing a wave of skepticism due to massive capital expenditures and the circular nature of some partnerships. "They've almost stretched their balance sheets to the limit, have negative free cash flow, and extremely high leverage," said Jed Ellerbroek, portfolio manager at Argent Capital Management, which holds Oracle stock. Oracle's debt risk is particularly worrying for investors. In recent months, the company has issued tens of billions of dollars in bonds through direct debt issuance and indirectly supported projects. Last week, the cost of insurance against Oracle's debt default rose to its highest level since March 2009. Analysts say this uncertainty far outweighs any positive news its quarterly earnings report might bring.