Oracle (ORCL) Stock: Company Announces $50 Billion Fundraising for Cloud Expansion

TLDR

• Oracle announces $45-50 billion fundraising initiative in 2026, equally split between debt and equity, to build cloud infrastructure for AI clients
• Cost to insure Oracle’s debt has surged from $40 to $153.90 per $10,000, matching financial crisis-era levels
• Oracle shares have plunged 36% in three months, dropping from over $300 to $164.58
• Both S&P and Moody’s issued negative credit outlooks citing cloud spending’s effect on cash flow
• Bondholders filed lawsuit in January alleging Oracle concealed its debt requirements for AI infrastructure expansion

Oracle revealed plans to raise $45-50 billion during 2026 to expand its cloud computing capabilities. The company will split the massive fundraising equally between debt instruments and equity offerings.

Oracle Corporation, ORCL

The announcement comes as Oracle races to meet contracted demand from major technology players. Key customers include OpenAI, Meta Platforms, Nvidia, Advanced Micro Devices, TikTok, and xAI.

Oracle already holds approximately $100 billion in long-term debt as of November. The additional borrowing arrives as market skepticism around AI infrastructure spending intensifies.

Debt Insurance Costs Skyrocket

The cost to protect against Oracle default has exploded in recent months. Five-year credit default swaps now cost $153.90 annually to insure $10,000 of debt.

This marks a dramatic jump from roughly $40 at the end of July. Current levels haven’t been seen since the 2008-09 financial crisis.

Oracle’s debt has essentially become a proxy for broader AI market confidence. Investors are increasingly nervous about the company’s growing dependence on unprofitable customers like OpenAI.

Credit rating agencies are taking notice. Both S&P and Moody’s issued negative outlooks for Oracle in recent months. Their concerns center on how cloud infrastructure investments are squeezing free cash flow.

Equity and Debt Mix

Oracle plans to raise approximately half its 2026 funding through equity-related offerings. This includes mandatory convertible preferred securities and a new at-the-market equity program worth up to $20 billion.

The remaining funding will come from a single issuance of investment-grade senior unsecured bonds. Oracle stated it intends to maintain its investment-grade credit rating throughout the process.

The company emphasized the raise is specifically to build additional capacity for Oracle Cloud Infrastructure. All funds will support existing customer contracts and commitments.

Legal and Market Headwinds

Oracle’s stock price has taken a beating lately. Shares closed at $164.58 on Friday, down 36% over the past three months.

The stock hit a peak above $300 in September. That came when excitement over the company’s $300 billion cloud deal with OpenAI reached fever pitch.

Legal troubles are piling up too. Bondholders sued Oracle in January claiming the company hid its need to raise substantial debt for AI infrastructure.

The lawsuit alleges investors suffered losses due to Oracle’s failure to disclose its financing requirements. This adds regulatory scrutiny to an already challenging fundraising environment.

The proceeds will flow directly into expanding Oracle Cloud Infrastructure capacity. The company needs to fulfill commitments to its largest customers in the AI space.

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