Oracle Oracle announced plans to issue debt and additional shares to raise approximately $45-50 billion, equivalent to about 1.4-1.5 trillion baht, within this year. The funds will expand Oracle Cloud Infrastructure (OCI) capabilities to support major cloud clients such as AMD, Meta, Nvidia, OpenAI, TikTok, and xAI, reflecting Oracle's role as a key backbone of the global cloud system facing surging demand in the AI era.
This announcement comes amid ongoing concerns about an AI bubble risk, questioning whether Oracle's massive investments will yield sufficient returns. Last year, developing AI data center infrastructure pressured Oracle's free cash flow into negative territory, a trend expected to persist through 2030. The company faces tens of billions of dollars in future expenses related to semiconductors and lease contracts over the coming years.
The statement said Oracle's fundraising plan includes issuing shares and debt securities linked to stock, comprising about half of the total target. This also involves mandatory convertible preferred securities and an at-the-market program with a maximum limit of $20 billion.
The other half of the funds will come from a single issuance of senior unsecured bonds in early 2026. Goldman Sachs Group will act as the manager, while Citigroup will lead the sale of shares through the at-the-market program and mandatory convertible preferred securities.
Analysts commented that issuing shares signals Oracle's commitment to maintaining its Investment Grade credit rating. However, the bond market may be reluctant to absorb a large volume of Investment Grade debt from Oracle due to existing obligations and movements in Credit Default Swaps (CDS). Additionally, share issuance might exert further downward pressure on stock prices.
A core aspect of Oracle's cloud investment is its contract with OpenAI, which entails approximately $300 billion in server lease obligations. Since OpenAI remains unprofitable, this heightens concerns over financial strain from substantial capital investments without a clear timeline for returns.
Furthermore, earlier this month Oracle faced investor pressure after bondholders filed a lawsuit claiming the company failed to adequately disclose the necessity for such large additional debt issuance.
The plaintiffs argue that the lack of transparency led investors to underestimate Oracle's financial risks, resulting in losses from bond holdings during a period when the company rapidly invested in data centers and cloud systems to meet soaring AI demand.
This lawsuit underscores Oracle's financial strain as it transitions from a traditional enterprise software provider to a key infrastructure player in the global AI economy, requiring massive upfront investments before clear returns materialize.
This move highlights the tight situation for tech companies this year, many of which have yet to demonstrate real AI-generated revenue. Oracle, as a core cloud provider, bears massive demand from global clients amid rapidly rising computing power and data center needs, forcing cloud providers to invest tens of billions of dollars to remain competitive and support the next-generation digital economy.
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