The market has once again retreated, and I discussed the issues raised by "Tech Stocks Hedging" with Teacher @大老师Bugsbunny .

1. Barclays has recently downgraded Oracle's debt rating to "Underweight" (equivalent to sell), pointing out that its aggressive AI investments have led to a strained financial situation, predicting that its cash may run out by November 2026, and its credit rating may drop to BBB- (close to junk status).

The root of the expenditure lies in the high costs of AI data centers, with construction costs reaching up to three times that of traditional data centers. Oracle's capital expenditures to fulfill AI contracts far exceed its free cash flow capacity.

Oracle's debt-to-equity ratio reaches 500%, far higher than its peers like Amazon (50%) and Microsoft (30%), making its financial situation the most fragile among major tech companies.

2. This is actually a microcosm of global tech companies heavily borrowing to compete for AI computing power.

The entire tech industry is financing the AI race through the issuance of large amounts of bonds. Over the past few months, the total amount of corporate bond issuance by major companies has been about $140 billion, and it is expected to reach $160 billion for the entire year.

In the past, tech giants primarily relied on their enormous cash flows to support expansion. However, the massive capital needs of AI data centers (with investments in the U.S. alone expected to exceed $2 trillion in the coming years) have forced them to collectively turn to the debt market. This includes not only Oracle but also companies like Meta and Google, which have issued hundreds of billions of dollars in bonds.

3. The market is concerned that if the returns or scale of AI technology do not meet expectations, the expansion supported by enormous debt may be difficult to sustain, potentially leading to a significant correction in stock prices.

What is particularly concerning is the analogy to the internet bubble period of the late 1990s.