WASHINGTON, Sept 17 (Reuters) - U.S. credit rating

agency Moody's Ratings flagged several potential risks in Oracle

Corp's ( ORCL ) $300 billion of recently signed artificial

intelligence contracts, but stopped short of taking ratings

action against the software giant.

Oracle said this month it expected booked revenue

at its Oracle Cloud Infrastructure business to exceed half a

trillion dollars.

The Wall Street Journal then reported that OpenAI had signed

a contract to purchase $300 billion in computing power from

Oracle over roughly five years, marking one of the biggest cloud

contracts ever signed. A majority of the new revenue Oracle

described will come from the OpenAI deal, the report said.

Moody's analysts on Wednesday referred to $300 billion in

recently signed contracts without naming the customers involved.

They noted the contracts highlight the "tremendous

potential" for Oracle's AI infrastructure business. But they

also brought attention to several risks laid out in Moody's July

ratings action, where the agency revised Oracle's credit rating

outlook to negative from stable.

One of the main risks flagged by Moody's involved the

"counterparty risk" of Oracle relying on large commitments from

a small number of AI companies to fund its business model.

"Counterparty risk is always a key consideration in any type

of project financing, particularly where there is a high

reliance on revenue from a single counterparty," Moody's

analysts wrote on Wednesday.

"And in our view, Oracle's data center build is effectively

one of, if not the world's largest, project financing," they

added.

The analysts further noted the company will see its debt

increase faster than its EBITDA, which will contribute to a

forecast high leverage of 4x before Oracle's EBITDA begins to

outpace its debt.

"It is likely that free cash flow will also be negative for

an extended period before reaching breakeven," the analysts

wrote.

Oracle had a Moody's issuer rating of Baa2, which is at the

lower end of investment-grade credit ratings.