Oracle is anticipating a significant funding boost, projecting to raise between $45 billion and $50 billion by 2026 to enhance its cloud infrastructure. The tech giant, led by billionaire Larry Ellison, disclosed its funding strategy on Sunday, which will involve a mixture of debt and equity financing to meet the burgeoning demand from key clients.
The company emphasized that the funds will be allocated to expand capacity in response to contractual commitments from major clients, including notable names like AMD, Meta, NVIDIA, OpenAI, TikTok, and xAI. To achieve its funding goals, Oracle plans to gather approximately half of the total through various equity-linked instruments and common equity issuances, which will include mandatory convertible preferred securities and a new at-the-market equity program worth up to $20 billion.
The other half of the funding is expected to be obtained through the issuance of senior unsecured bonds, targeted for early 2026. This strategic move comes amid growing concerns from investors regarding Oracle’s AI infrastructure expansion, especially as its debt increases and its financial outcomes are closely linked to OpenAI, which has yet to demonstrate profitability or a clear funding plan for its infrastructure needs.
In January, Oracle faced a lawsuit from bondholders alleging that the company hid its necessity to sell substantial additional debt to develop its artificial intelligence infrastructure. This legal challenge surfaces amidst a backdrop where the cost of insuring Oracle’s debt against default peaked in December, reaching levels not seen in over five years.
This funding push reflects Oracle’s commitment to staying competitive in the cloud market, particularly as businesses increasingly rely on robust AI capabilities. As demand for cloud services surges, Oracle’s strategic investments may position the company favorably in a rapidly evolving tech landscape.