Oracle filed plans on Monday to raise $20 billion through new stock and bonds. The money will help pay for the company’s artificial intelligence buildout.
The company will sell $10 billion in common stock and $10 billion in senior notes, according to filings with the Securities and Exchange Commission. Oracle had already outlined the fundraising at its investor day last week.
Even so, Oracle shares fell 8.8% on Monday to close at $119.22. The stock slipped another 0.94% in after-hours trading to $118.10.
“This seems to be exactly what they previewed,” said Rob Oliver, senior research analyst at Baird. “So I’m not sure why the market is freaking about it.”
Oracle said it plans to use the proceeds for general corporate purposes. These may include capital spending, debt repayments and future investments.
What Oracle Said at Investor Day
Oracle’s stock first rose after its investor day last Wednesday. At that event, the company forecast revenue of at least $225 billion for fiscal 2030.
Oracle also said it would limit its additional capital market funding to $20 billion for the fiscal 2027 to 2030 investment cycle. That amount matches the stock and bond plan filed on Monday.
UBS analyst Karl Keirstead called the cap “a major relief given concerns about the state of debt markets and the cost of capital.” In the same Thursday note, he said UBS has argued these debt market concerns have been overstated.
Oracle plans to use vendor financing, customer-provided hardware and customer prepayments to support its spending. The company expects to reach positive free cash flow in the second half of 2028.
Debt Concerns Weigh on Shares
Oracle’s stock and bonds have been under pressure as investors worry about the large amount of debt used to fund AI infrastructure. The company was co-founded by former CEO Larry Ellison.
Oracle shares are down 33% so far in 2026. Over the past 12 months, the stock has fallen 50%.
The yield on Oracle’s investment-grade 4.95% bond due in 2031 is now 7.276%. Bond yields rise when bond prices fall.
Oracle’s five-year credit default swaps, which act as insurance against default, also show the shift. The spread sits at 292, up 265% in one year.
Gavan Nolan of S&P Global Market Intelligence said that level is more in line with a high-end junk bond rating. Oracle is still rated investment grade.
S&P downgraded Oracle to BBB- in July, one level above high yield. The company had $125.34 billion in debt as of Aug. 31, mostly in senior notes.
Pat Nerney, head of investment solutions at Dynasty Financial Partners, said execution is what matters most for Oracle. “Can they do what they say they are going to do? We view this as the narrative across the AI space,” he said in an email to CNBC on Monday.
“If this gets executed according to plans laid out, they will be rewarded,” Nerney said. “If they have to come back to market in the back half of ‘27 after telling everyone this was the last of the capital needed ... look out.”
