Oracle taps investors for $20 billion to finance AI expansion

Nov 2 (Reuters) - Oracle plans ‌to raise $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 nearly 6%, extending ⁠a roughly 33% decline this year through Friday.

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

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 $20 billion in additional financing for AI through fiscal 2030.

Shares rallied about ​11% 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 $125.34 billion ‌in notes payable and other borrowings as of August 31, compared with fiscal 2026 revenue of $67.36 billion. It expects ⁠revenue to exceed $225 billion and adjusted earnings to top $21 per share in fiscal 2030.

Wall Street expects the company's adjusted profit per share for fiscal 2027 to be $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% 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.

(Reporting by Akash Sriram in Bengaluru, additional reporting by Shashwat Chauhan in Bengaluru; Editing by Shilpi Majumdar, Anil D'Silva and ‌Joyjeet Das)

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