AI in action · Markets
Oracle Pays Up to 8.65% to Fund Its AI Build-Out
Oracle raised $20 billion for its AI and cloud build-out on Monday: shares at $116, 11.2% below Friday's close, and bonds paying 7% to 8.65%. The stock fell 8.8% to $119.22.
Oracle showed on Monday, November 2, what it now costs to finance an AI data-centre build-out with someone else's money. The company said it would raise $20 billion through bond and share sales to fund its AI and cloud infrastructure, Reuters reported. The stock half was priced at $116 a share for 86.2 million shares, 11.2% below Friday's close. The debt half, about $10 billion, came in five fixed-rate tranches maturing between 2029 and 2046 with rates of 7% to 8.65%; a floating-rate tranche outlined in an earlier filing was dropped from the final deal.
Those coupons are the story for anyone following AI financing. Oracle is an investment-grade borrower, yet it is paying rates that a few years ago would have been associated with much weaker credits, and its existing 6.85% bonds due 2066 fell more than 1.2 cents on the dollar on the news, according to Tradeweb data cited by Reuters. Oracle's notes payable and other borrowings stood at $125.34 billion at the end of August, against fiscal 2026 revenue of $67.36 billion.
The timing made it harder. Less than a week earlier Oracle had told investors that capital spending would peak this fiscal year and next, that free cash flow should turn positive in the second half of fiscal 2028, and that it would raise no more than $20 billion of additional AI financing through fiscal 2030. The shares rose about 11% that day. Monday's deal used the whole allowance in one go, and the stock fell 8.8% to $119.22, down about 39% this year. The company said the money is for general corporate purposes, including capital spending, debt repayment, acquisitions, dividends and buybacks.
Some analysts saw value in the drop. Stephens' Brett Huff upgraded Oracle to overweight with a $213 target, noting about 850 megawatts of capacity delivered in the first quarter, CNBC reported. The bull case is that Oracle has signed long-term contracts for much of that capacity and that 2030 revenue above $225 billion, the company's target, would make today's borrowing look cheap. The bear case is concentration: a large part of Oracle's AI backlog is tied to OpenAI, and investors have been paying close attention to that exposure.
Either way, the price of AI capital is now visible. When a company of Oracle's size pays up to 8.65% for 20-year money and sells stock at a double-digit discount, other borrowers building data centres, from neoclouds to developers, can expect their own costs to follow. That is how a spending boom gets tested: not by a single bad quarter, but by the rate at which lenders are willing to keep funding it.
Sources: Investing.com (Reuters) — Oracle plans to raise $20 billion through bonds and stock sales (Nov 2, 2026); Bloomberg — Oracle Launches $10 Billion Sale of US Investment Grade Bonds (Nov 2, 2026); CNBC — Nasdaq starts November with 1% loss as tech melts down again (Nov 2, 2026)