Oracle (ORCL) Stock: Software Giant Plans $50 Billion Raise to Fund AI Cloud Expansion

TLDR

• Oracle plans to raise $45-50 billion in 2026, split evenly between debt and equity, to expand its cloud infrastructure for AI customers
• The company’s debt insurance costs have spiked to $153.90 per $10,000, up from $40 in July, reaching levels not seen since the 2008-09 financial crisis
• Oracle stock has dropped 36% over three months, falling from over $300 in September to $164.58
• S&P and Moody’s have issued negative credit outlooks for Oracle due to cloud infrastructure spending impacting cash flow
• Bondholders sued Oracle in January, claiming the company hid its need to raise substantial debt for AI infrastructure

Oracle announced plans to raise between $45 billion and $50 billion in 2026 to build out its cloud computing infrastructure. The company will split the funding evenly between debt and equity issuances.

Oracle Corporation, ORCL

The fundraising comes as Oracle works to meet contracted demand from major customers. These include OpenAI, Meta Platforms, Advanced Micro Devices, Nvidia, TikTok, and xAI.

Oracle already carries around $100 billion in long-term debt as of November. The new borrowing will test investor appetite for AI-related debt at a time when skepticism is growing.

The cost to insure Oracle’s debt has jumped sharply. Five-year credit default swaps now trade at 153.90 basis points. That means it costs $153.90 annually to insure $10,000 of Oracle debt.

This represents a massive increase from around $40 at the end of July. The current levels are the highest since the 2008-09 financial crisis.

Oracle’s debt has become a barometer for market confidence in AI spending. Investors are watching closely as the company’s fortunes tie more closely to unprofitable customers like OpenAI.

Credit Rating Pressure Mounts

S&P and Moody’s have both issued negative credit rating outlooks for Oracle in recent months. Both firms cited concerns about the impact of cloud infrastructure spending on free cash flow.

Oracle said it plans to maintain an investment-grade balance sheet. The company intends to complete a single issuance of investment-grade senior unsecured bonds early in 2026.

For equity financing, Oracle will use a combination of equity-linked and common equity issuances. This includes mandatory convertible preferred securities and a new at-the-market equity program of up to $20 billion.

Stock Price Takes a Hit

Oracle shares have fallen 36% in the past three months. The stock closed at $164.58 on Friday, down from a peak of more than $300 in September.

The September peak came when excitement over Oracle’s $300 billion cloud-computing deal with OpenAI was at its highest. Since then, investor sentiment has cooled.

Bondholders sued Oracle in January. They claim the company concealed its need to sell substantial additional debt for AI infrastructure buildout.

The lawsuit alleges bondholders suffered losses because of Oracle’s lack of disclosure. This legal challenge adds another layer of scrutiny to the company’s fundraising plans.

The funds raised will go directly into Oracle Cloud Infrastructure. The company needs to build additional capacity to fulfill existing customer contracts.

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