Oracle taps investors for US$20bil to finance AI expansion

NEW YORK: Oracle plans to raise US$20 billion through bond and share sales, regulatory filings showed on Monday, as the software giant taps investors to fund its costly AI and cloud infrastructure build-out.

Shares of the company fell 8.8 per cent to US$119.22, bringing their losses this year to about 39 per cent.

Oracle said it would use the proceeds for general corporate purposes, including capital spending, debt repayment, acquisitions, dividends and share buybacks.

The share sale is expected to be priced at US$116 per share, an 11 per cent discount to Friday's close, Bloomberg News reported, citing people familiar with the matter.

Oracle did not immediately respond to the Reuters request for comment.

The fundraising underscores the scale of Oracle's AI investment as it seeks to more than triple revenue by fiscal 2030. The company said last week that capital spending would peak this fiscal year and the next, while pledging to raise no more than US$20 billion in additional financing for AI through fiscal 2030.

Shares rallied about 11 per cent on Wednesday after CFO Hilary Maxson said Oracle also expects free cash flow to turn positive in the second half of fiscal 2028.

Oracle had US$125.34 billion in notes payable and other borrowings, as of August 31, compared with fiscal 2026 revenue of US$67.36 billion. It expects revenue to exceed US$225 billion and adjusted earnings to top US$21 per share in fiscal 2030.

Wall Street expects the company's adjusted profit per share for fiscal 2027 to be US$8.14, according to data compiled by LSEG.

The bond offering comprises six tranches maturing between 2029 and 2046, including one floating-rate tranche and five fixed-rate tranches. Interest rates, prices and the number of shares have not been set.

Oracle's existing 6.85 per cent bonds due in 2066 fell more than 1.2 cents on the dollar, according to Tradeweb data.

Investors have focused on Oracle's AI spending because it lacks the revenue scale of cloud rivals Microsoft and Amazon and has significant exposure to OpenAI, the loss-making developer of ChatGPT.