Here's Why Oracle Stock Slumped Today
The technology company needs to overcome doubts over the cost of its AI infrastructure build out ad its reliance on OpenAI.
Overview
Oracle (NYSE: ORCL) stock declined more than 6% today as the company was hit with more bad news following last week's credit rating downgrade by S&P Global Ratings to BBB- from BBB. The latest news, Apple suing OpenAI, indirectly relates to some of the factors touched on in the downgrade, and that's what investors are concerned about today.
The consumer electronics giant filed a lawsuit against OpenAI, alleging that it stole trade secrets from Apple and seeking to block the AI company from using them. It's the latest controversy for the company: , after Elon Musk filed a high-profile lawsuit against OpenAI and its CEO, Sam Altman. While Musk lost the case, it was only on the basis that he hadn't made the legal accusations within the time frame of the statute of limitations.
Details
While it's far from clear where the Apple case will go, it raises questions about OpenAI, which might not be good news for its partner, Oracle. It's noticeable that Oracle's credit default swap (CDS) pricing (the cost of insuring against default) started rising after the company signed a $300 billion deal last year with OpenAI, in which Oracle will build out AI infrastructure to sell compute to the AI company.
Source
Originally published at www.fool.com.