Oracle Files to Sell US$20bn in Stock Ahead of AI Buildout

Oracle stock fell 8.8% this week after the company announced plans to raise about US$20bn through stock and bond sales. 

According to regulatory filings, Oracle is seeking US$10bn from each offering to fund its expansion of AI infrastructure.

The announcement comes as Oracle shares struggle to regain momentum, currently trading at half their year-to-date high from early June.

“This seems to be exactly what they previewed,” said Rob Oliver, Senior Research Analyst at Baird, expressing his confusion over the market’s response to the news.

Oracle says it plans to use the proceeds for general corporate purposes, which may include capital expenditures, repayment of debt and future investments.

Stock optimism despite mounting risks

The company’s stock initially bounced after last week’s investor day, when Oracle also issued a revenue forecast of at least US$225bn for fiscal 2030. 

At the time, Oracle also said it was limiting its additional capital market funding for the fiscal 2027-2030 investment cycle to that US$20bn.

Oracle plans to turn to vendor financing, customer-provided hardware and customer prepayments to help it move towards positive free cash flow, which it expects to reach in the second half of 2028.

Additionally, Oracle’s stock and bonds have been under pressure amid growing investor concerns about the massive amount of debt being taken on to fund its AI buildout.

Discussing Oracle’s AI investment strategy, Luke Yang, a technology equity analyst at Morningstar, says the company is spending more than it makes.

He says: “They're already pushing themselves to the limit. The entire plan is going to be highly risky if the AI-related demand is not as strong as we would expect.”

Oracle’s partnership with OpenAI

Oracle shares are down 33% in 2026 and 50% over the past 12 months. The yield on its investment-grade 4.95% bond due in 2031 is currently 7.276%.

The shift in risk sentiment is also evident in Oracle’s five-year credit default swaps, which are insurance against default. 

While still an investment-grade credit, Oracle was downgraded by S&P to BBB- in July, one rating level above high yield. It had US$125.34bn in debt as of August, with the bulk in senior notes.

Despite aggressive spending on AI buildout, Wall Street hasn't given up on Oracle stock yet.

According to Barchart, the consensus rating on Oracle sits at "Strong Buy”, with the mean price target of about US$241 indicating potential upside of nearly 100% from current levels.

Oracle is currently relying heavily on demand from its biggest customer – OpenAI. In September, the two companies announced a cloud partnership deal worth US$300bn.

Daniel Newman, CEO of Futurum Group, says that while OpenAI is still an industry giant, it remains an unprofitable company.

He says: “It was the halo around your proverbial head that's now the noose around your neck. People think some part of what OpenAI is committed [to] will not come to fruition.”

Additionally, OpenAI has reportedly pulled out of a major data centre project with Oracle in Texas, though Oracle has dismissed concerns around the future of the project.

Oracle’s key partners:

Accenture: Accenture teams with Oracle to deploy enterprise cloud architectures, optimise mission-critical business processes, and accelerate large-scale generative artificial intelligence initiatives.
CEO: Julie Sweet | Headquarters: Dublin, Ireland

Microsoft: Microsoft partners with Oracle to embed low-latency database infrastructure directly within Azure, facilitating seamless multicloud migrations and enterprise workflows.
CEO: Satya Nadella | Headquarters: Redmond, Washington, US

NVIDIA: NVIDIA collaborates with Oracle to accelerate generative AI computing, providing optimized GPU infrastructure and advanced enterprise microservices across cloud environments.
CEO: Jensen Huang | Headquarters: Santa Clara, California, US