Oracle shares rise as US$50 billion fundraising eases data centre funding fears

2026-02-02 - 15:06

The company said on Sunday it expects to raise US$45–50 billion in 2026 through a mix of share sales and debt. (EPA Images pic) BENGALURU: Oracle shares gained 2.5% on Monday after Wall Street analysts said the software company’s US$50 billion fundraising plan allays worries over its ability to finance a massive data-center expansion with OpenAI. Long a smaller player in the cloud market, Oracle has emerged as a major player in the business of renting computing power over the past year, thanks to its US$300 billion deal with OpenAI. But investors have grown worried about how it would fund the data-center expansion needed to serve OpenAI and other customers, including Elon Musk’s xAI and Meta. Its shares fell more than 15% last year, as its results in December showed a cash burn of around US$10 billion for the first half of the fiscal year. The company said on Sunday it expects to raise between US$45 billion and US$50 billion in calendar 2026 through a combination of stock sales and debt, arguing that the move reflected its commitment to maintain an investment-grade rating amid the AI spending. As much US$20 billion of that is expected to come from sales of its shares at the market price, while the rest would be funded by the sale of bonds early in 2026. The company said it does not expect to issue additional debt beyond that this year. “Oracle is not only saying they’re committed to investment-grade debt, but they are sending a clear message to bond investors and the rating agencies that they are,” Guggenheim analysts said. Oracle disclosed on Monday that it has filed for an offering of 100 million depositary shares. “We can see how the debt markets will likely be calmer post this transaction as the combination of extra equity and the mandatory convertible will reduce the debt needs and strengthen Oracle’s balance sheet,” Barclays analysts said in a note. Investors sold Oracle’s credit-default swaps that offer bondholders a hedge against default. Both its 10-year CDS and 5-year CDS dropped about 35 basis points each, according to Markit Data. Still, investors remain cautious over whether the hundreds of billions tech firms are spending on AI infrastructure would pay off given limited evidence of real-world productivity gains.