Oracle faces mounting pressure on its investment-grade credit rating amid aggressive AI infrastructure expansion, including a $300 billion OpenAI partnership driving record capital expenditures. S&P downgraded the company to BBB- in July 2026 with a stable outlook, citing rising leverage in the mid-4x range and projected free cash flow deficits exceeding $35 billion in fiscal 2027, while Moody’s holds a Baa2 rating with a negative outlook. Five-year CDS spreads have widened sharply to around 295 basis points, trading in line with BB/B high-yield levels and signaling elevated default risk. Environmental pushback on data center projects and broader cooling in AI-related debt sentiment add uncertainty, though Oracle has emphasized preserving its rating and reports strong cloud revenue growth. Resolution hinges on whether leverage stays controlled and positive operating cash flow emerges by fiscal 2029.