The strain inside the AI boom’s biggest infrastructure bet has reached a courtroom. Oracle’s own investors are suing, saying the company hid how shaky its $300bn deal with OpenAI really was.
A Michigan public pension fund, the City of Sterling Heights Police & Fire Retirement System, filed the class action on Wednesday in a Tennessee state court, as Courthouse News reported. It targets Oracle’s $25bn note sale from February, and names co-founder Larry Ellison, former chief executive Safra Catz, the current co-CEOs, and a long row of underwriting banks.
The missing disclosure
The claim runs narrow but sharp. Before selling the notes, Oracle told investors its backlog of booked-but-unfulfilled orders had exploded. That figure, known as remaining performance obligations, had jumped from about $97bn to more than $523bn in a year. Almost all of the growth, the suit says, traced to a single customer: OpenAI.
What Oracle did not disclose, the pension argues, is that OpenAI had missed its own revenue and user targets. It also says OpenAI’s finance chief had privately raised doubts about whether the company could pay for all the cloud computing it had promised to buy. The registration statement, the complaint says, “contained no such disclosures.”
Debt to keep the promise
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To serve OpenAI, the suit alleges, Oracle had to pile on debt. It took on tens of billions in fresh capital spending and signed more than $200bn in long-term leases. On one earnings call, executives flagged $50bn of capital expenditure for 2026 alone. When investors pushed back, the complaint says, management pointed to that same swelling backlog.
Then the notes fell. Their price has dropped “significantly” from the offering, the pension says. That fall, it argues, harmed the whole class. Oracle’s shares have had a rough run too, as Wall Street frets over the concentration risk in the OpenAI deal.
Not just an Oracle problem
The case reads like the AI bubble’s circular-financing worry, filed as a legal document. Analysts have long asked whether OpenAI can actually pay for the compute it has committed to across the industry. Oracle ranks among the biggest counterparties. It has borrowed heavily to build data centres and cut thousands of jobs to fund them.
It is not the only giant in the dock. Microsoft faces its own shareholder suit over AI spending, and critics keep warning that the whole AI supply chain carries dangerous levels of debt. There is a European wrinkle too. Several of the named underwriters, including Deutsche Bank, BNP Paribas, HSBC and Santander, are European banks.
No court has tested these claims yet. A complaint tells one side of the story, and Oracle declined to comment. But it is the first time the doubts swirling around the Oracle-OpenAI pact have been put to a judge. The offering’s $75mn in underwriting fees may end up buying a fight.
