Oracle wants $20 billion to fund its AI future - and its stock is paying the price

By Emily Bary and Joy Wiltermuth

Oracle debt has been trading like a 'junk bond' as the company borrows money and issues stock to help finance its AI cloud growth

Oracle's stock was falling on Monday.

Oracle is out raising more money to finance its artificial-intelligence cloud buildout.

The technology giant announced Monday that it plans a $10 billion stock offering. Oracle (ORCL) also will conduct a $10 billion debt offering.

The debt and equity raise comes on the heels of a blowout $25 billion Microsoft (MSFT) bond deal, as well as plans by Meta (META) to issue nearly $100 billion in stock over the coming months.

Stock and bond portfolios are full of tech and AI-related exposure, which can lead to exacerbated moves when sentiment shifts around the historic infrastructure push.

"Not a day goes by when we aren't hearing of another hyperscaler coming out with a bond or equity issuance," said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments, in an interview Monday. "The market has been hot and cold on this," he added.

Oracle shares were down about 5% on Monday, reflecting trepidation around how the big cloud companies could spend perhaps $1 trillion annually on capital expenditures in the next few years. Capital expenditures refer to money spent on data-center infrastructure, equipment and other related assets.

Oracle noted in a filing that the proceeds will go toward "general corporate purposes," including capital expenditures, debt repayments or future investments.

Last week, Oracle's management team seemingly calmed Wall Street's nerves with its discussion of the financing that could be expected in the future. In short, the company said it was "committed to limiting additional funding to be raised in the capital markets" through the fiscal year ending in May 2030. The company was targeting $20 billion in financing for that stretch.

That's the aggregate amount of the offerings announced on Monday. As such, this will be Oracle's "last bond deal to fund the capex buildout over the next few years," CreditSights analysts Jordon Chalfin and Michael Pugh wrote in a Monday client note. While the company holds ratings in the low-investment-grade credit bracket, its debt trades like a Double BB, or "junk"-rated bond, they said.

That reflects the growing bifurcation in the market and increased selectivity around which kinds of AI credit investors want in their portfolios.

Oracle has been borrowing money to finance its buildout of cloud-computing capacity as it chases big opportunities with OpenAI and other AI players.

Shares of Oracle have fallen more than 60% from their peak close in September 2025, a reflection of jitters over the company's ability to generate appropriate returns on its AI investments and pay off its debt. The company painted a better-than-expected picture of its financial prospects during last week's investor day, noting a target for positive free cash flow during the second half of the fiscal year that ends next May.

Analysts were expecting negative free cash flow for that period, meaning they anticipated the company would spend more on capital expenditures and operating costs than it would generate in cash through its business.

Oracle didn't immediately respond to a request for comment.

-Emily Bary -Joy Wiltermuth

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

11-02-26 1231ET