Oracle plans to raise $20 billion from investors through a combination of bond and share sales, according to regulatory filings released on Monday. The software company plans to use the money to support its expensive artificial intelligence (AI) and cloud infrastructure expansion.
Oracle shares fell nearly 6% on Monday, extending the company's losses this year. Its stock had already fallen around 33% through Friday, showing growing investor concerns about the company's financial position and spending plans, Reuters reported.
Oracle's AI spending and revenue targets
The fundraising highlights how much Oracle is spending on AI infrastructure. The company is investing heavily in the technology as it works towards increasing its revenue to more than three times its current level by fiscal 2030.
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Oracle expects its capital spending to reach its highest level this fiscal year and the next. However, the company said last week that it does not plan to raise more than $20 billion in additional financing for AI investments through fiscal 2030, Reuters reported.
Oracle's debt compared with its revenue
Oracle already has a large amount of outstanding debt. As of August 31, the company had $125.34 billion in notes payable and other borrowings, according to its financial disclosures. Oracle has set ambitious financial targets for fiscal 2030. It expects its revenue to cross $225 billion and its adjusted earnings to exceed $21 per share by then, according to Reuters.
{{/usCountry}}Oracle already has a large amount of outstanding debt. As of August 31, the company had $125.34 billion in notes payable and other borrowings, according to its financial disclosures. Oracle has set ambitious financial targets for fiscal 2030. It expects its revenue to cross $225 billion and its adjusted earnings to exceed $21 per share by then, according to Reuters.
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The planned bond sale will be divided into six groups, also known as tranches. These bonds will have different maturity dates ranging from 2029 to 2046.
Oracle has not yet finalised the interest rates, prices or number of shares it plans to sell. These details of the fundraising have not been announced in the regulatory filing.
Why investors are worried about Oracle's AI plans
Investors are closely watching Oracle's AI spending because the company does not have the same revenue scale as its biggest cloud competitors. Microsoft and Amazon have larger cloud businesses, raising questions about Oracle's ability to compete with them while spending heavily on AI infrastructure, according to Reuters.