Oracle prices $20 billion in new shares and bonds, the funding it called the last needed for its AI build-out

Oracle has lined up $20 billion from public markets in a single day. On November 2 the company filed for concurrent offerings of common stock and senior notes, and late that evening it announced their pricing: 86,206,897 shares at $116 each and $10 billion of bonds. Both deals are expected to close on November 4, and neither depends on the other.

The terms

The share sale should bring in about $9.9 billion after underwriting fees and expenses, Oracle says. The offering price sits well below the $130.67 closing price of October 30 cited by ShiftDelete, which estimated dilution for existing shareholders at about 2.5%. The notes come in five fixed-rate tranches: $2 billion at 7% due 2029, $1.75 billion at 7.45% due 2031, $2.25 billion at 7.85% due 2033, $2.5 billion at 8% due 2037 and $1.5 billion at 8.65% due 2046. Earlier reports on the filing had described a six-tranche structure including floating-rate notes.

Oracle lists general corporate purposes for the money, which may include capital spending, debt repayment, acquisitions, dividends or buybacks. BofA Securities is the sole global coordinator. Shares fell 3.2% in premarket trading on Monday after the filing became public, according to GuruFocus.

Why it is raising now

The deal follows Oracle's investor day last week, when it set out how it intends to pay for the cloud capacity it is building, largely for AI workloads. Reuters reported that the company pledged to raise no more than $20 billion in additional AI financing through fiscal 2030, evenly split between debt and equity, with chief financial officer Hilary Maxson calling it the final amount needed for the rest of this cycle. Oracle expects capital spending to peak this fiscal year and next, free cash flow to turn positive in the second half of fiscal 2028, and revenue to exceed $225 billion in fiscal 2030. Its shares rose more than 12% on those forecasts.

The risks

The raise adds to an already large balance sheet. GuruFocus puts Oracle's total debt at $125.3 billion as of August 31, and notes that the company sold $25 billion of bonds in February alongside a $5 billion mandatory convertible preferred offering and a $20 billion at-the-market share programme. ShiftDelete reports that S&P cut Oracle to BBB- in July, one notch above junk. Reuters notes that OpenAI has added hundreds of billions of dollars to Oracle's cloud backlog, and OpenAI is still losing money, which ties the payoff of the build-out closely to one customer's ability to pay.