Oracle Files Plans to Sell $20 Billion in Stock and Bonds for AI Buildout

Oracle filed plans Monday to issue $10 billion in common stock and $10 billion in senior notes to finance its artificial intelligence buildout, according to filings with the Securities and Exchange Commission. The fundraising was outlined last week at its investor day, but Oracle shares tumbled more than 6% Monday. The company said it plans to use proceeds for general corporate purposes, which may include capital expenditures, debt repayments and future investments.

Funding plan and outlook

At investor day last Wednesday, Oracle issued a revenue forecast of at least $225 billion for fiscal 2030 and said it was limiting additional capital market funding for the fiscal 2027 through 2030 investment cycle to $20 billion. Oracle plans to turn to vendor financing, customer-provided hardware and customer prepayments to help transition to positive free cash flow, which it expects to reach in the second half of 2028. "This seems to be exactly what they previewed," said Rob Oliver, senior research analyst at Baird. "So I'm not sure why the market is freaking about it."

Market reaction and credit concerns

Oracle's stock initially bounced after last Wednesday's investor day, but stock and bonds in the company, co-founded by former CEO Larry Ellison, have been under pressure amid growing investor concerns about the massive amount of debt being taken on to fund AI infrastructure. Oracle shares are down 33% in 2026 and 50% over the past 12 months. The yield on its investment-grade 4.95% bond due in 2031 is currently 7.267%. The sentiment shift is also seen in Oracle's five-year credit default swaps, which are insurance against default. The spread sits at 296, up 270% in one year. That's more in line with a high-end junk bond rating, according to S&P Global Market Intelligence's Gavan Nolan. While still an investment-grade credit, Oracle was downgraded by S&P to a BBB- in July, one rating level above high yield. It has $125.34 billion in debt, as of Aug. 31, with the bulk in senior notes.

Analyst views

"This is a major relief given concerns about the state of debt markets and the cost of capital (although UBS has argued that these debt market concerns have been over-stated)," UBS analyst Karl Keirstead said in a note on Thursday. What ultimately matters for Oracle is execution, Pat Nerney, head of investment solutions at Dynasty Financial Partners, said in an email to CNBC Monday. "Can they do what they say they are going to do? We view this as the narrative across the AI space," he said. "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."

Sources: CNBC · Techmeme