Oracle Moves to Raise $20 Billion Through Stock and Bond Sales for AI Expansion

Oracle has filed plans to issue $10 billion in common stock and $10 billion in senior notes, according to SEC filings, as the company looks to fund its artificial intelligence infrastructure buildout.

The fundraising had already been outlined at an investor day last week, but shares still fell more than 5% on Monday. Oracle said proceeds will go toward general corporate purposes, which may include capital expenditures, debt repayment and future investments.

The stock had initially risen after the investor day, when Oracle issued a revenue forecast of at least $225 billion for fiscal 2030 and said it was capping additional capital market funding for the fiscal 2027 to 2030 investment cycle at $20 billion.

UBS analyst Karl Keirstead called the cap "a major relief given concerns about the state of debt markets and the cost of capital," though he noted UBS has argued those debt market concerns have been over-stated.

Oracle plans to lean on vendor financing, customer-provided hardware and customer prepayments to reach positive free cash flow, which it expects in the second half of 2028.

The company's stock and bonds have been under pressure as investors worry about the debt being taken on to fund AI infrastructure. Oracle shares are down 33% in 2026 and 50% over the past 12 months, while the yield on its investment-grade 4.95% bond due in 2031 sits at 7.267%.

Its five-year credit default swaps spread stands at 296, up 270% in a year - more in line with a high-end junk bond rating, according to S&P Global Market Intelligence's Gavan Nolan. S&P downgraded Oracle to BBB- in July, one level above high yield. The company carries $125.34 billion in debt as of August 31, mostly in senior notes.

Dynasty Financial Partners' Pat Nerney said execution is what matters. "Can they do what they say they are going to do?" he wrote to CNBC. "If this gets executed according to plans laid out, they will be rewarded. If they have to come back to market in the back half of '27 after telling everyone this was the last of the capital needed ... look out."

Source: CNBC