Oracle Corp. is planning a massive capital raise of between $45 billion and $50 billion this year.
The company, chaired by billionaire Larry Ellison, said it plans to achieve its funding objectives using a combination of debt and equity financing.
The company said on Sunday that the funds will be raised through a mix of debt and equity offerings and will be used to expand cloud capacity to meet contracted demand from its largest customers.
These include major technology players such as Advanced Micro Devices (AMD), Meta Platforms, Nvidia, OpenAI, TikTok and Elon Musk’s xAI.
Oracle’s aggressive funding plan comes at a time when investors are increasingly questioning whether the wave of AI-related capital expenditure across the tech sector will deliver adequate returns.
The company’s shares are down about 50% from their record high reached on September 10, erasing an estimated $460 billion in market value.
What they are saying
In an excerpt of the statement by the company, it said,
“Oracle is raising money in order to build additional capacity to meet the contracted demand from our largest Oracle Cloud Infrastructure customers, including AMD, Meta, NVIDIA, OpenAI, TikTok, xAI and others”,
Heavy investments in AI data centres have already pushed Oracle’s free cash flow into negative territory, a position Bloomberg data suggests could persist until 2030.
The company faces tens of billions of dollars in future spending commitments, largely tied to semiconductor purchases and long-term lease obligations for data centre infrastructure.
Oracle plans to raise roughly half of the targeted funds through equity-linked instruments and common equity issuance. This includes mandatory convertible preferred securities and an at-the-market equity programme of up to $20 billion.
The remainder of the funding is expected to come from a single large bond issuance scheduled for early 2026. Oracle previously raised $18 billion in 2025 in one of the largest corporate bond deals of that year.
However, concerns remain about whether debt markets will be willing to absorb another sizable investment-grade issuance, given Oracle’s existing obligations and rising credit risk indicators.
Backstory
Investor unease has been reflected in the credit derivatives market.
- As Oracle’s debt burden grew and fears of an AI investment bubble intensified, demand for credit default swaps linked to the company surged.
- By December, pricing on some of these instruments had reached levels last seen during the 2008 global financial crisis.
- A major pillar of Oracle’s cloud strategy is its partnership with OpenAI, which has reportedly committed to spending about $300 billion on server capacity rented from Oracle.
However, OpenAI is not currently profitable, adding to concerns about the sustainability of returns from such capital-intensive contracts.
What you should know
Larry Ellison, Oracle’s founder, chairman and chief technology officer, remains one of the most influential figures in global technology.
With an estimated net worth of about $218 billion, Ellison is the largest shareholder of Oracle, owning more than 40% of the Austin, Texas–based software giant.
- Oracle reported $57.4 billion in revenue for the financial year ended May 31, 2025, cementing its position as one of the world’s leading enterprise technology companies.
- Beyond Oracle, Ellison has diversified investments spanning technology, sports and real estate.
- He holds a stake in Tesla, owns a professional sailing team, controls the Indian Wells Tennis Garden tournament, and is the primary owner of Lanai Island in Hawaii.
One lesser-known move in his investment history includes committing $1 billion to SoftBank’s technology-focused investment fund, highlighting his long-standing bet on disruptive tech platforms.
