Oracle and the AI boom’s hidden debt bomb

The old adage goes that during a boom, the companies that profit most are the ones selling the picks and shovels. This January, even as consensus had largely settled around the idea that an AI bubble exists, something even Sam Altman acknowledged last August, Blackstone called investing in the “picks and shovels” of AI a “generational” opportunity. The safer bet, we’re told, lies not in the models themselves but in AI’s physical infrastructure: data centers, chips, and electricity. “The Real AI Talent War Is for Plumbers and Electricians,” declared a January headline in Wired. Of the major players in artificial intelligence, a few might reasonably be considered picks-and-shovels companies. Nvidia, led by Jensen Huang, is one. Another is Oracle, which under Larry Ellison has spent the past year building some of the country’s largest AI data centers to provide computing power for companies like OpenAI. But insofar as Oracle has been selling picks and shovels, enormous ones at that, it has also, over the past few months, come to be seen as a canary in the AI-bubble coal mine. In the roughly 10 months since September 2025, when Oracle signed a $300 billion deal with OpenAI that sent its stock soaring 36% in a single day, briefly making Ellison the world’s richest man, the company’s shares have fallen more than 43%, wiping out those gains. Meanwhile, the market for Oracle’s credit default swaps, which allow investors to bet on the possibility that the company could miss bond payments, has surged as its debt rating hovers just above junk status. Since Oracle began building out Stargate, its sprawling data center campus in Abilene, Texas, the company has faced growing scrutiny over the highly leveraged financing behind both the project itself and its broader AI data center buildout. The scale of the risk Oracle is taking is increasingly visible on its balance sheet. The company now carries more than $160 billion in outstanding liabilities—including $133 billion tied to the