Oracle to Raise $20B Debt on Top of $20B Equity Issuance for $70B AI Buildout
GOOG•Oracle’s spending rose from $55.7B last fiscal year to a projected $70B in fiscal 2027 for cloud and AI infrastructure. The company will raise $20B in new debt and equity on top of a prior $20B issuance, while its $300B OpenAI contract and –$60B cash flow strain its investment-grade rating.
1. Fiscal Year Spending Growth
Oracle spent $55.7B on cloud and AI last fiscal year and forecasts $70B in fiscal 2027 to expand infrastructure.
2. Financing Strategy
On top of a previously announced $20B equity issuance, the company plans to raise an additional $20B through debt and equity financing this fiscal year.
3. OpenAI Contract Dependence
Oracle’s execution of its $300B five-year deal with OpenAI underpins its cloud AI investments, raising concerns about client payback and workload sustainability.
4. Credit and Cash Flow Challenges
The company’s free cash flow was roughly –$60B last year and it maintains an investment-grade rating just above the threshold, highlighting balance sheet pressure.
