[Analyst: Oracle Faces AI Bubble Concerns, Debt Risks Particularly Worrisome] Three months ago, Oracle (ORCL.N) delivered strong earnings prospects that drove its stock to achieve the best single-day performance in thirty years. However, just one quarter later, the company and the entire AI sector are facing a very different situation. Oracle is set to release its earnings report after the market closes, and its stock price has plummeted 33% since hitting an all-time high on September 10. AI companies are encountering a wave of skepticism due to massive capital expenditures and certain partnership arrangements that exhibit characteristics of circular transactions. 'They’ve almost stretched their balance sheet to the limit, with negative free cash flow and extremely high leverage,' said Jed Ellerbroek, portfolio manager at Argent Capital Management, who holds Oracle shares. Oracle’s debt risks are particularly concerning to investors. In recent months, the company has issued tens of billions of dollars in bonds through direct issuance and indirectly supported projects. Last week, the cost of insuring against Oracle’s debt default rose to its highest level since March 2009. Analysts suggest that this uncertainty far outweighs any potential positives from its quarterly earnings report.