Oracle Stock Under Pressure From Existing $125B Debt as AI Expansion Demands Another $20B

Oracle shares faced volatility on Tuesday after declining nearly 9% during the Monday trading session as the tech giant moved to raise another $20 billion through stock and bond offerings, bringing its aggressive artificial intelligence expansion into sharper focus as investors question how much debt the company can accumulate before its costly infrastructure ambitions become a financial liability.

The sell-off on Monday came five days after Oracle reassured investors that it would limit additional capital raising through fiscal 2030 to $20 billion. Oracle subsequently moved to fulfil the entire $20 billion funding commitment announced at its investor day, pricing a $10 billion bond offering and a $10 billion equity sale on 2nd November.

The commitment was separate from the $20 billion at-the-market equity raise Oracle had already completed in Q1 fiscal 2027.

The speed of the fundraising, combined with Oracle's existing $125 billion debt burden, unsettled investors already concerned about the cost of building the data centres and computing infrastructure needed to meet growing demand for AI services.

Oracle's $125 Billion Debt Burden Raises Questions

The fundraising comes as Oracle faces mounting financial commitments from its AI infrastructure expansion.

The company reported $125.34 billion in notes payable and other borrowings as of 31st August, according to Reuters. That figure was nearly twice its shareholders' equity and compared with fiscal 2026 revenue of $67.36 billion.

Oracle generated $31.98 billion in operating cash flow during fiscal 2026 but spent $55.66 billion on capital expenditure, leaving it with negative free cash flow of $23.69 billion. The latest $10 billion bond offering will add to those borrowing obligations. The remaining $10 billion will come from an equity sale, which could dilute existing shareholders.

Oracle priced 86.2 million shares at $116 apiece, an 11.2% discount to its $130.67 closing price on 30th October. The company also priced $10 billion in fixed-rate bonds across five tranches, with coupons ranging from 7% to 8.65% and maturities extending from 2029 to 2046

The proceeds are intended for general corporate purposes, including capital expenditure, debt repayment, acquisitions, dividends, and share repurchases.

Oracle Promises Positive Cash Flow as AI Spending Peaks

Despite the market reaction, Oracle has maintained an ambitious growth outlook, betting that its investments in cloud computing and AI infrastructure will eventually generate substantial returns.

At its 28th October investor day, the company forecast total revenue of at least $225 billion in fiscal 2030, representing compound annual growth of more than 35% from fiscal 2026. Management also expects capital expenditure to peak during fiscal 2027 and fiscal 2028 before declining in fiscal 2029.

Oracle is targeting positive free cash flow in H2 fiscal 2028 and at least $30 billion in free cash flow during fiscal 2029. It also expects to begin funding its growth internally from fiscal 2029, with net debt falling below 3.5 times adjusted EBITDA that year.

The company has reaffirmed its fiscal 2027 revenue forecast of at least $90 billion and adjusted earnings per share of $8.10.

Credit rating agencies have so far maintained their investment-grade assessments. Fitch retained Oracle's BBB rating, two notches above speculative grade, while Moody's also affirmed its rating but maintained a negative outlook.

That leaves Oracle facing a difficult balancing act. Its AI infrastructure ambitions could substantially expand its cloud business, but investors are increasingly focused on the borrowing costs, shareholder dilution, and cash requirements needed to deliver those promises.

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