The Chart That Oracle Equity Bulls Don't Want You To See

The article argues that the AI boom is fueled by a growing debt bubble. Oracle's aggressive investment in AI infrastructure, funded by debt, is a key example. Oracle's high debt-to-equity ratio contrasts with competitors like Amazon, Microsoft, Meta, and Google. This shift could trigger a debt-fueled arms race among tech giants in the AI sector. The cost of insuring Oracle's debt has increased, suggesting heightened credit risk. The Bank of England is examining lending to data centers, recognizing potential financial stability risks. The BOE worries about the rapid expansion of AI infrastructure and related debt. The article highlights that the future of funding for AI development will be primarily based on credit. A large funding gap, estimated at $800 billion by the end of the decade, is anticipated. The private credit market may step in to fill the gap if public markets falter. Increased credit spreads, particularly for Oracle, indicate market stress and potential valuation discrepancies. The author believes one of these metrics is wrong because credit spreads and asset valuations are linked. The author warns of possible market corrections as a result of over-optimistic AI investments.