Oracle to raise $20 billion for AI and cloud expansion
The software company's shares dropped nearly 6 per cent on Monday as investors weigh its heavy spending on artificial intelligence infrastructure.
Oracle intends to secure $20 billion through the sale of shares and bonds to fund its artificial intelligence (AI) and cloud infrastructure growth, according to regulatory filings released on Monday, as reported by Hindustan Times.
The company's stock price declined by almost 6 per cent on Monday. This follows a decline of approximately 33 per cent through Friday, which Reuters reported reflects investor anxiety regarding the firm's spending and financial status.
The software provider aims to triple its current revenue by fiscal 2030. While capital spending is expected to hit record levels this fiscal year and the next, the company stated last week that it does not intend to seek more than $20 billion in extra financing for AI through fiscal 2030.
Oracle's financial disclosures show the company held $125.34 billion in borrowings and other notes payable as of August 31. By fiscal 2030, the company expects revenue to surpass $225 billion and adjusted earnings to be over $21 per share.
The planned bond sale will consist of six tranches with maturity dates between 2029 and 2046. The regulatory filing did not include specific details regarding the number of shares, interest rates, or prices.
Reuters reported that investors are monitoring the AI expenditure because Oracle lacks the revenue scale of cloud competitors such as Amazon and Microsoft, leading to questions about its ability to compete while investing heavily in infrastructure.
