JPMorgan Warns Oracle's 500% Debt-To-Equity Ratio Indicates Significant Borrowing, Far Exceeding AI Competitors' Debt Levels
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 28 2025
0mins
Should l Buy MSFT?
Source: Benzinga
Oracle's Debt Levels: J.P. Morgan strategist Michael Cembalest highlighted that Oracle Corp. has a significantly high debt-to-equity ratio of 500% and a net debt-to-EBITDA ratio of approximately 400%, indicating it is more leveraged than its AI peers like Amazon and Microsoft.
Impact of Stock Buybacks: Cembalest noted that Oracle's debt-to-equity ratio was misleading due to stock buybacks that reduced the equity denominator, exaggerating the company's debt situation.
Credit Rating and Investor Sentiment: Despite the high debt levels, Oracle's credit rating aligns with its net debt ratio, suggesting that bond investors are still willing to purchase more of its debt.
Stock Performance: Oracle's stock has seen a significant increase of nearly 70% year-to-date, although it experienced a slight decline recently, reflecting a strong price trend despite concerns over its debt levels.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for MSFT is 631.36 USD with a low forecast of 500.00 USD and a high forecast of 678.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 401.140
Low
500.00
Averages
631.36
High
678.00
Current: 401.140
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Azure Revenue Growth: Microsoft's Azure cloud computing business has achieved a year-over-year growth rate of 39%, indicating strong demand for its computing resources, which further solidifies Microsoft's market position in the AI era and is expected to drive future revenue growth.
- Strong Overall Performance: Microsoft's total revenue increased by 17% year-over-year to $81.3 billion, with its Productivity and Business Processes division growing by 16% and consumer cloud revenue rising by 29%, demonstrating excellent performance across its customer base and the positive impact of AI feature integration on business growth.
- Opportunity in OpenAI Investment: Microsoft holds a 27% stake in OpenAI, and while OpenAI's contribution to Microsoft's overall business is limited, investing in Microsoft provides indirect exposure to generative AI, enhancing the attractiveness of Microsoft stock for investors.
- Attractive Valuation for Investment: Microsoft's current operating price-to-earnings ratio is near its lowest levels since 2020, and despite trading at a premium in the past, this valuation correction presents a compelling buying opportunity for investors, with significant upside potential expected over the next few years.
See More
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- Significant User Growth: OpenAI CEO Sam Altman revealed in an internal message that ChatGPT is experiencing over 10% monthly growth, with approximately 800 million weekly active users, demonstrating strong appeal despite fierce competition in the market.
- Product Update Plans: Altman also mentioned that OpenAI plans to release an updated chat model this week, and its AI coding tool Codex has grown by about 50% in the past week, which will further enhance its product competitiveness.
- Ad Testing Launch: OpenAI is set to begin testing ads in ChatGPT today, facing criticism from competitor Anthropic; Altman emphasized the goal of making AI accessible to a broad user base that cannot afford subscription fees.
- Market Valuation Surge: OpenAI's valuation is expected to soar above $800 billion, while Anthropic's latest funding round could elevate its valuation to $350 billion, indicating strong growth potential for both companies in the AI sector.
See More
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- Market Recovery: After a tough week, Microsoft saw its stock rise over 3%, significantly outperforming the S&P 500's 0.5% increase, indicating a rebound in investor confidence towards software stocks.
- Investment Bank Analysis: Morgan Stanley's analyst highlighted that the market is underestimating the potential of veteran developers like Microsoft in the AI space, suggesting that fears regarding their competitiveness in AI are overblown, presenting a buying opportunity for investors.
- OpenAI Growth Resurgence: CNBC reported that OpenAI has returned to over 10% monthly growth in both user count and overall usage, with Microsoft’s 27% stake in the company further solidifying its strategic position in the AI sector.
- Future Outlook on AI: Although the sell-off in Microsoft may have been excessive, its ongoing investment in AI is viewed as crucial for future competitiveness, positioning Microsoft to leverage innovation and technological advantages for long-term growth.
See More
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- Stock Surge: Oracle's stock rose 9.85% to close at $156.61, reflecting renewed market optimism regarding its cloud services and AI opportunities, particularly following D.A. Davidson's upgrade to Buy, indicating strong investor confidence in future growth.
- Volume Spike: Trading volume reached 49.5 million shares, approximately 73% above the three-month average of 28.6 million shares, suggesting a significant increase in market interest in Oracle, potentially signaling strong investor enthusiasm for its cloud business.
- AI Investment Boost: The stock's rally is closely tied to increased AI-driven infrastructure spending, with investors gaining confidence that Oracle's cloud business will benefit from this trend, alleviating concerns about competition from larger hyperscalers and supporting long-term growth prospects.
- Future Outlook: As Oracle expands its cloud capacity, substantial investments are required, prompting investors to closely monitor upcoming earnings and cloud utilization to assess whether AI-driven demand can translate into sustainable growth without straining free cash flow.
See More
Microsoft Stock Rebounds, Market Confidence Restored
- Market Rebound: After a tough week, Microsoft shares rose over 3% on Monday, significantly outperforming the S&P 500's 0.5% increase, indicating a recovery in investor confidence towards software stocks.
- Investment Bank Analysis: Morgan Stanley analyst Keith Weiss highlighted that the market is underestimating veteran developers' potential in integrating artificial intelligence (AI), suggesting that the pessimism surrounding these companies is overblown, which could present new investment opportunities for Microsoft.
- OpenAI Growth Resurgence: According to CNBC, OpenAI, in which Microsoft has a significant investment, has returned to over 10% monthly growth in both user count and overall usage, further solidifying Microsoft's strategic position in the AI sector.
- Long-term Competitive Advantage: While Microsoft's investments in AI may not yield immediate returns, its ongoing commitment to technology is seen as crucial for maintaining competitiveness, underscoring the strategic importance of the company's future market positioning.
See More
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- CapEx Overview: Meta, Amazon, Microsoft, and Alphabet are projected to spend a combined $670 billion in capital expenditures in 2026, with Amazon leading at up to $200 billion, indicating a significant commitment to infrastructure development among these tech giants.
- Historical Comparison: This $670 billion expenditure represents 2.1% of U.S. GDP, ranking just behind the Louisiana Purchase and surpassing other major historical infrastructure projects like U.S. railroads and the interstate highway system, highlighting its strategic significance.
- Investor Caution: Despite aggressive spending, investor concerns about future growth are rising, as Meta and Microsoft's capital expenditures exceed 30% of annual revenue, with Meta potentially surpassing 50% for the first time, which may lead to decreased investor confidence in their stocks.
- Market Performance Volatility: Following the latest earnings reports, the year-to-date stock performance of the four companies varies, with Meta and Alphabet showing relative strength, while Amazon and Microsoft have seen declines, reflecting market ambivalence towards high CapEx amid growth potential concerns.
See More
