Oracle rallies after announcing plan to raise up to $50 billion in debt and equity this year to fund its AI ambitions
On Sunday evening, Oracle told investors just how much money it’s going to need to raise from them to fund its data center expansion efforts.
Management said it plans to raise $45 billion to $50 billion this calendar year, split roughly equally between debt and equity in a bid to maintain its investment grade rating.
The lion’s share of the equity raise ($20 billion) will come from an at-the-money offering that enables the firm to opportunistically issue shares. This year’s debt issuance will come in one fell swoop, per the company, and happen early in the year. Accordingly, the company announced an eight-part US dollar bond offering on Monday.
Shares are up 5% in the premarket.
Traders seem to be looking on the bright side: at least this is an answer. During the conference call that followed Q2 results in December, Oracle said that capex for the fiscal year would be $15 billion higher than previously anticipated. When asked how much money the company would need to raise, CEO Clay Magouyrk said, “It’s hard to answer that question exactly,” before saying he thought it would be “less, if not substantially less” than $100 billion in order to complete its multiyear AI build-out.
“Oracle is raising money in order to build additional capacity to meet the contracted demand from our largest Oracle Cloud Infrastructure customers, including AMD, Meta, NVIDIA, OpenAI, TikTok, xAI and others,” per the press release.
Put it in alphabetical order all you want — we all know who your biggest customer is!
Oracle’s (over)reliance on OpenAI as a source of future revenues has prompted markets to view the firm as less creditworthy. But the company’s long-term bonds are also rallying sharply on Monday, presumably because the company is not depending only on debt to raise money.
