Alphabet vs. Oracle: Here's What the Debt Market Is Saying

By Lee Samaha – Apr 11, 2026 at 8:45PM ESTKey PointsDebt markets show more concern for Oracle's default risk than Alphabet's.Equity markets are wary of Oracle and Microsoft's exposure to OpenAI.Well-funded leaders like Alphabet may be safer artificial intelligence (AI) investments.The market is, completely understandably, focused on artificial intelligence (AI) hyperscalers to determine whether there's an AI bubble brewing. Those concerns are magnified by the share price performance of the leading hyperscaler companies in 2026 (see chart). The two that stand out the most are Oracle (ORCL +0.08%) and Alphabet (GOOG 0.21%) (GOOGL 0.41%), and a closer look at what bond markets are pricing in for their default risk says a lot about the two companies' prospects and the market's fears over an AI bubble. Equity markets and hyperscalers The underperformance of Oracle and Microsoft (MSFT 0.60%) in 2026 is clear in the chart. The most likely reason is that both have significant exposure to OpenAI. Oracle and OpenAI have a massive $300 billion cloud computing agreement whereby the former will build out AI data center infrastructure to sell computing services to OpenAI. Meanwhile, Microsoft management confirmed on its last earnings call that 45% of its remaining performance obligations (RPO) are from OpenAI. ^SPX data by YCharts The equity markets are worried, but what are the debt markets saying? Image source: Getty Images. Debt markets Looking at credit default swaps (CDSes) on company debt is a great way to assess the debt market's mood. CDSes are a form of insurance against a bond's default. They are priced in basis points (bps), where 100 bps equals 1%. As an example, it will cost you 2% of a bond's face value every year to insure against a default based on a CDS price of 200bps. Here's a look at the pricing for Oracle, Alphabet, and Microsoft five-year bond CDSes over the past year. Data source: S&P Global Market Intelligence. Chart by author. What it means to investors Clearly, the debt market is not particularly worried about a default at Alphabet and Microsoft. However, the debt market is more concerned about Oracle's risk of default, and the equity markets are worried about Oracle and Microsoft's ability to generate earnings from their OpenAI exposure. Interestingly, OpenAI's recent funding round, in which Amazon, Nvidia, and Microsoft took part, was successful, with the company raising $122 billion based on a post-money valuation of $852 billion. The funding implies that investors remain willing to back AI companies' growth, but there are concerns about the cost of the buildout. As such, it makes sense to stick to well-funded companies, like Alphabet, that are also leading in building engine models, rather than Oracle, which is building out AI infrastructure for OpenAI.Read NextApr 11, 2026 •By Jennifer SaibilArtifical Intelligence (AI) Stocks Are Rising on the News of an Iran War Ceasefire. Here Are 3 Great Ones to Pick Up Now.Apr 11, 2026 •By James HiresThis Is the Smartest Artificial Intelligence (AI) Stock to Buy With $500 Right NowApr 11, 2026 •By Harsh ChauhanThe Smartest Growth Stocks to Invest $1,000 in As Investors Rotate Out of TechApr 11, 2026 •By Stefon Walters2 AI Stocks I'd Buy Before Sandisk -- Even After Its Stock Has Surged More Than 2,200% in the Past YearApr 10, 2026 •By Lawrence NgaPreparing for the Next Market Crash?

This Is One Stock You'll Want On Your Watchlist.Apr 8, 2026 •By Adam LevyBest Growth Stocks to Buy in 2026About the AuthorLee Samaha is a contributing Stock Market Analyst at The Motley Fool covering industrials, electricals, energy, materials, transportation, and infrastructure stocks. Prior to The Motley Fool, Lee was a Civil Engineer and Investment Manager. He holds a Bachelor of Civil and Structural Engineering from Southampton University and a Certificate in Investment Management from Chartered Institute for Securities & Investment. Lee first cut his investing teeth on The Motley Fool bulletin boards (commonly referred to as the “Fool Boards,”) and he’s infinitely grateful to all of the investors he learned from in this powerful investing community.TMFSaintGermainX@LeeSamahaStocks MentionedAlphabetNASDAQ: GOOG$315.70(-0.21%)-$0.67OracleNYSE: ORCL$138.09(+0.17%)+$0.23MicrosoftNASDAQ: MSFT$370.82(-0.60%)-$2.25AlphabetNASDAQ: GOOGL$317.18(-0.41%)-$1.31Meta PlatformsNASDAQ: META$629.75(+0.22%)+$1.36AmazonNASDAQ: AMZN$238.43(+2.05%)+$4.78NvidiaNASDAQ: NVDA$188.67(+2.59%)+$4.76*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.