Big bet on AI! Oracle Corporation (ORCL.US) plans to raise 50 billion dollars to expand cloud infrastructure.

Oracle Corporation (ORCL.US) said last Sunday that it plans to raise $45 billion to $50 billion by 2026 through a combination of debt and equity issuance, to expand the additional capacity of its cloud infrastructure. The company said in a statement, "This financing is intended to build more capacity to meet the already contracted demand of our largest-scale Oracle Corporation Cloud Infrastructure (OCI) customers, including companies such as AMD, Meta, NVIDIA Corporation, OpenAI, TikTok, and xAI." It is reported that Oracle Corporation plans to raise about half of the funds through the issuance of securities linked to equity and common stock, including mandatory convertible preferred securities, and financing through an "at-the-market" (ATM) stock program with a maximum size of $20 billion. Oracle Corporation also stated that it plans to raise the remaining funds needed through a one-time bond issuance in early 2026. The company borrowed $18 billion in 2025, one of the largest corporate bond issuances that year. A key component of Oracle Corporation's cloud investment is its contract with OpenAI. Under the contract, OpenAI has committed to spend about $300 billion to lease servers from Oracle Corporation. As OpenAI is not currently profitable, this has added to concerns in the market about the financial pressure of making huge capital expenditures without a clear timetable for returns. At a time when investors are increasingly concerned about whether large-scale, AI-related investments by companies such as Oracle Corporation will ultimately pay off, Oracle Corporation's stock price has fallen by over 50% since reaching a record high on September 10, resulting in a market value loss of over $460 billion. The rapid decline in Oracle Corporation's stock price has been further amplified by investor concerns about the prospects of AI. Currently, some of the world's largest tech companies are committing billions of dollars in capital expenditures to build data centers, but in some cases, they have not provided a clear path for return on investment. Additionally, the "circular transactions" between OpenAI, a non-profit private company, and companies such as Oracle Corporation and NVIDIA Corporation have made the market more cautious. Eric Ditton, President and CEO of Wealth Alliance Investment Advisory, said, "There are some assumptions here, such as how much money OpenAI will actually spend, where that money will come from, and whether these things will actually happen. Perhaps Oracle Corporation's stock price had already outperformed its fundamentals before, and now the market is saying, okay, show me the results, I want to see real returns." It is worth mentioning that, according to recent reports, TD Cowen, an investment bank under TD Securities, has indicated that due to the difficulties in financing Oracle Corporation's AI data center expansion, Oracle Corporation is facing severe financial difficulties and is considering measures such as large-scale layoffs and selling of business units to address the situation. The TD Cowen research report shows that Oracle Corporation plans to lay off 20,000 to 30,000 employees, releasing $8 billion to $10 billion in cash flow. Furthermore, Oracle Corporation is also considering selling off its healthcare software division Cerner, which it acquired for $28.3 billion in 2022. TD Cowen estimates that Oracle Corporation will incur $156 billion in capital expenditures due to the agreement with OpenAI (to build data centers worth $300 billion) and its expected capital expenditures for 2026 have been raised by $15 billion to $50 billion. In addition to building data centers for OpenAI, Oracle Corporation has also reached agreements with Meta and NVIDIA Corporation, with the total investment in data centers totaling $523 billion, requiring the purchase of approximately 3 million GPUs. TD Cowen points out that several Bank of America Corp have stopped providing loans for Oracle Corporation's related data center projects. The institution adds that Asian banks seem to be more optimistic about Oracle Corporation, but Bank of America Corp's stance raises doubts about whether Oracle Corporation can obtain support from other large banks. TD Cowen warns that this year, both equity and debt investors are questioning Oracle Corporation's ability to fund this expansion project, as evidenced by the widening of Oracle Corporation's credit default swaps (CDS) spreads and the pressure on Oracle Corporation's stock and bond prices.