Investing in AI causes trouble! Oracle Corporation (ORCL.US) is collectively sued by creditors and its stock price falls sharply in response.

On Wednesday local time, Oracle Corporation (ORCL.US) was collectively sued by bondholders, causing the stock to fall by over 4%. The plaintiffs claimed that the company, led by billionaire Larry Ellison, did not disclose crucial information about the need for significant debt issuance while advancing the construction of artificial intelligence (AI) infrastructure, leading to investor losses. The proposed collective lawsuit was filed in the Manhattan court of New York State by investors who purchased $18 billion in bonds and bonds issued by Oracle Corporation on September 25 last year. Just two weeks before this bond issuance, Oracle Corporation had announced a five-year, $300 billion computational power supply agreement with OpenAI. These investors expressed surprise that just seven weeks after this bond issuance, Oracle Corporation returned to the capital market to raise $38 billion in financing through loans to support two data centers supporting the OpenAI agreement. Currently, investors are closely monitoring Oracle Corporation's debt burden, with concerns in the market that the company may be taking on high risks in building AI data centers. As of the end of November last year, Oracle Corporation's undischarged bond and other borrowing amounts totaled approximately $108 billion. "The bond market responded rapidly and dramatically to Oracle Corporation's increased debt issuance," bondholders pointed out. This batch of originally lower-rated investment grade bonds saw prices fall sharply due to the increased credit risk, and their yields and credit spreads have fallen to levels comparable to low-rated corporate bonds. Led by the Ohio Carpenters Pension Fund, the plaintiffs argued that Oracle Corporation's vague statement in the bond offering documents that they "may" need further financing was false and misleading in fact, the company had already planned to increase debt at that time. The plaintiffs claim that, under relevant provisions of the 1933 U.S. Securities Act, Oracle Corporation, Chairman Ellison, former CEO Safra Catz, CFO Maria Smith, and the 16 banks involved in underwriting the bonds are all strictly responsible for the false statements and must compensate investors, with the specific amount of compensation not yet disclosed. Oracle Corporation has refused to comment on the matter, and the bondholders' legal representatives have not yet responded to requests for comment.