Oracle's stock surged 5.06% in pre-market trading on Wednesday, driven by mixed reactions to its recent deal with OpenAI. The deal has significantly increased Oracle's backlog, but analysts caution about the sustainability and financial risks associated with the partnership.
D.A. Davidson analysts noted that while the OpenAI deal has boosted Oracle's backlog, the market is wary of the company's high borrowing costs and the uncertainty surrounding OpenAI's future performance. The analysts highlighted that Oracle's debt insurance costs have risen, reflecting market concerns about the deal's viability. Despite these risks, the stock's pre-market surge indicates investor optimism about Oracle's positioning in the AI sector.