Oracle plans to raise $20 billion through bond and share sales, turning a financing pledge for its AI expansion into a proposed offering in regulatory filings on 2 November, Reuters reported. The company is expanding its cloud infrastructure while seeking to limit additional AI financing through fiscal 2030. Its shares fell 4% in premarket trading after a roughly 33% decline for the year through 30 October.
Key points
- Oracle plans to raise $20 billion through bonds and shares under the financing ceiling it set at an investor day.
- The bond offering has six tranches maturing between 2029 and 2046, with one floating-rate tranche and five fixed-rate tranches.
- Oracle had $125.34 billion in notes payable and other borrowings at 31 August, against fiscal 2026 revenue of $67.36 billion.
- The company projects fiscal 2030 revenue above $225 billion and adjusted earnings of more than $21 a share.
Oracle splits bond sale across six tranches
Oracle’s proposed bond sale spans maturities from 2029 to 2046. Five tranches carry fixed rates and one carries a floating rate. Interest rates, bond prices and the number of shares to be sold had not been set, Reuters reported. Those terms will determine what investors pay for the securities and Oracle’s borrowing costs.
Oracle said it could use the proceeds for general corporate purposes. Its stated uses include capital spending, debt repayment, acquisitions, dividends and share buybacks. The proposed sale therefore covers the company’s broader funding needs as well as the cloud infrastructure build-out behind its AI plans.
At 31 August, Oracle had $125.34 billion in notes payable and other borrowings. Its revenue for fiscal 2026 was $67.36 billion. The planned bond issue would add to the company’s borrowing if completed, while the share sale would bring in equity capital. Both forms of financing are part of the $20 billion plan described in the filings.
The $20 billion ceiling runs through fiscal 2030
Oracle set a ceiling of $20 billion for additional AI financing through fiscal 2030 at an investor day before the filing. The company expects to raise $10 billion in equity and $10 billion in gross debt under that plan, GuruFocus reported. Refinancing existing debt is excluded from the ceiling.
The plan follows a $20 billion equity raise that Oracle completed in the first quarter of fiscal 2027, according to GuruFocus. AI Affairs previously reported Oracle’s financing cap and its positive-cash-flow target. The latest filing puts bond and share sales behind the additional financing pledge.
Oracle said capital spending would peak in fiscal 2027 and fiscal 2028. Management expects spending to ease in fiscal 2029, while customer prepayments, hardware supplied by customers and vendor financing could reduce its upfront cash needs, GuruFocus reported. Those arrangements would affect how much of the infrastructure expansion Oracle must fund directly as it builds capacity.
The company is targeting positive free cash flow in the second half of fiscal 2028 and at least $30 billion in fiscal 2029. Its target for positive free cash flow falls within fiscal 2028, one of the two years in which Oracle said capital spending would peak.
Oracle’s cloud ambitions meet Microsoft and Amazon
Oracle is building cloud capacity to compete for AI business against Microsoft and Amazon. It has less revenue than those rivals and substantial exposure to OpenAI, the loss-making company behind ChatGPT, Reuters reported. The scale of that expansion has made Oracle’s spending a focus for investors.
Oracle shares fell 4% in premarket trading on 2 November, after a roughly 33% decline for the year through the preceding Friday. The proposed offering would bring investors into both sides of Oracle’s capital structure: bond buyers would receive claims under the debt terms, while purchasers of new shares would hold equity.
For fiscal 2030, Oracle projects sales of more than $225 billion and adjusted earnings per share above $21.
