JPMorgan Chase: Oracle's aggressive AI investment has raised concerns in the bond market

Oracle Inc. (ORCL. N) 's aggressive artificial intelligence spending plans have put its bonds in the spotlight as Wall Street looks for cracks in the artificial intelligence boom. JPMorgan credit analyst Erica Spear expects the pressure on the company's bonds to continue over the next year. Last week, Oracle shares fell by the most in nearly 11 months and its credit risk gauge climbed to a 16-year high. The company reported revenue that missed market expectations, while raising its annual capital spending target by $15 billion and more than doubling its future lease commitments. One of the co-CEOs, Clay Magouyrk, said the company is committed to maintaining its investment-grade debt rating and that the company's actual borrowing may fall short of analysts' forecasts of more than $100 billion. "This is precisely the challenge for investors: management continues to finance investments almost exclusively through debt, and while this is not surprising, it remains frustrating in the face of widespread uncertainty about investment timelines and caps," Spear said.