Oracle Bags $7B Pentagon Deal as Credit Rating Hits Rock Bottom
Just as Wall Street dumps Oracle over massive AI debt, the military comes to the rescue with a massive $7 billion lifeline to keep their legacy servers running.
The 10-year contract covers software for on-premises data centers across the military, intelligence community, and the Coast Guard, with the CIA stepping up as the very first customer. Pentagon officials claim this arrangement saves taxpayers $441 million by fundamentally improving how the defense department purchases legacy software licenses and technical support.
This massive government deal arrives right when Oracle co-founder Larry Ellison has been building deep political ties, backing AI infrastructure initiatives like Stargate and securing access to deployment on classified military networks. Financing high-end hardware for clients like OpenAI turns out to require a steady stream of old-fashioned defense dollars.
While cloud revenue surged 47%, traditional database software sales dipped 2%, dragging Oracle stock down 38% this year. The mounting debt loads needed to fund AI infrastructure pushed rating agency S&P to downgrade the company's credit rating to BBB-, placing it right on the edge of junk status.
A tech titan burning cash on AI hype gets rescued by legacy military databases. Defense contracting has officially become the ultimate bailout mechanism for Silicon Valley's expensive modern gambles.
Source: CNBC
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