Usman Salis
Wall Street has a complicated relationship with Big Tech, and JPMorgan's latest move perfectly captures the contradiction. Just weeks after analysts warned that Oracle's debt was alarmingly high, the bank turned around and backed a $38 billion loan to the same company. It's a stark reminder that banks are increasingly willing to fund the very risks they publicly flag—especially when AI is involved.
Oracle's Debt Problem
As zerohedge pointed out, JPMorgan analyst Michael Cembalest pointed out in September that Oracle's debt-to-equity ratio had hit 500%—ten times higher than Amazon's 50%, and dwarfing Microsoft's 30% and the even lower ratios at Meta and Google. Oracle has borrowed aggressively to build AI and cloud infrastructure, expand data centers, and forge partnerships with companies like NVIDIA and government clients. The strategy has potential, but it's risky. High leverage amplifies gains when things go well, but it can become a serious problem when markets tighten or interest rates climb.
Despite its own warnings, JPMorgan reportedly facilitated the $38 billion debt package anyway. As financial commentators quickly noted, the irony is hard to ignore: the same bank cautioning about dangerous leverage is helping to create more of it. But there's logic to the decision. Oracle's cloud business is growing, its AI partnerships are scaling up, and its enterprise software generates steady recurring revenue. For JPMorgan, backing one of the few companies challenging Amazon and Microsoft in the cloud may simply be too good an opportunity to pass up—risk or not.
Debt Is Fueling the AI Boom
This isn't just about Oracle. Across the tech industry, companies are leaning heavily on debt to fund AI expansion. Unlike the software-driven growth of the 2010s, which was financed largely by cash flow and stock buybacks, today's AI race requires massive upfront capital for GPUs, networking infrastructure, and data storage. What once looked like excessive leverage is starting to feel like the new normal. In the AI era, staying competitive means borrowing big—and banks like JPMorgan are willing to lend.
Oracle's position cuts both ways. If its AI and cloud bets pay off, the company could become one of the biggest winners of the next tech cycle, and JPMorgan's loan will look brilliant. But if growth stalls or credit conditions worsen, that 500% leverage could turn into a serious liability fast. The move signals a broader shift in how Wall Street thinks about tech financing: even as analysts warn about rising debt risks, the same institutions are pouring billions into the companies driving the AI revolution.
Usman Salis
