Oracle is going big to keep up in the AI infrastructure race.
The company said it plans to raise $45 billion to $50 billion this calendar year, split roughly evenly between debt and equity, as it ramps up spending on data centers. Management made clear the structure is designed to protect its investment grade credit rating, which helps explain why it is not leaning solely on borrowing.
The bulk of the equity portion, about $20 billion, will come through an at the money share offering, allowing Oracle to sell stock gradually depending on market conditions. On the debt side, the company is moving fast, announcing an eight part US dollar bond deal early in the year.
At Least Now Investors Have a Number
Back in December, Oracle revealed that its capex outlook had jumped by $15 billion but struggled to clearly say how it would fund the buildout. Now investors finally have a concrete plan, and the stock is reacting positively, rising in premarket trading.
Management said the capital is needed to build capacity for major Oracle Cloud Infrastructure customers, including AMD, Meta, Nvidia, OpenAI, TikTok, and xAI. The message is simple: demand is already contracted, and Oracle is spending to meet it.
Credit Fears Ease, Bonds Rally
Oracle’s heavy exposure to OpenAI driven demand has raised concerns in credit markets about customer concentration risk. But the balanced funding mix appears to be calming those nerves. The company’s long term bonds are also rallying, likely because Oracle is not relying purely on debt to finance its expansion.
In other words, investors may be saying this: if you are going to spend big on AI, at least show us exactly how you are paying for it.