Updated version 6 - Oracle is raising $20 billion from investors for the expansion of its artificial intelligence business.

Pricing details have been added in paragraphs 2, 3, 4, and 11.

Reuters, November 3 - Oracle ORCL.N said on Monday it will raise $20 billion through the issuance of bonds and shares, with the software giant seeking investor funding to support its costly artificial intelligence and cloud infrastructure construction.

Later that day, Oracle set the issuance price for 86.2 million shares at $116 per share, an 11.2% discount to Friday’s closing price.

The company will raise about $10 billion through the share offering and a further $10 billion through the issuance of bonds maturing between 2029 and 2046.

After announcing the financing plan earlier on Monday, the company’s share price dropped 8.8% to $119.22, bringing its cumulative decline for the year to about 39%.

Oracle said it will use the proceeds for general corporate purposes, including capital expenditures, debt repayment, acquisitions, dividend payouts, and stock buybacks.

Bloomberg was the first to report the pricing details for this share offering.

This financing highlights the scale of Oracle’s investment in artificial intelligence, as the company aims to more than triple its current revenue by fiscal year 2030. Last week, the company said capital expenditures (link) will peak in both the current and next fiscal year, and committed to raising no more than $20 billion through additional AI financing before fiscal year 2030.

On Wednesday, after CFO Hilary Maxson said Oracle also expects free cash flow to turn positive in the second half of fiscal year 2028, the company's share price rose about 11%.

As of August 31, Oracle’s total notes payable and other borrowings amounted to $125.34 billion, while fiscal year 2026 revenue was $67.36 billion. The company expects its fiscal year 2030 revenue to exceed $225 billion, with adjusted earnings per share above $21.

According to data compiled by London Stock Exchange Group (LSEG), Wall Street expects the company’s adjusted earnings per share for fiscal year 2027 to be $8.14.

This bond issuance includes five tranches of fixed-rate bonds with interest rates ranging from 7% to 8.65% and maturities between 2029 and 2046. Floating-rate bonds cited by Oracle in previous regulatory filings were not included in the final bond issuance plan.

According to Tradeweb data, Oracle’s existing 6.85% bond due in 2066 (US68389XEC56=TE) fell more than 1.2 cents.

Investor focus on Oracle’s AI spending stems from the company’s lack of revenue scale compared to cloud rivals such as Microsoft and Amazon, and its significant ties to OpenAI, the loss-making company that developed ChatGPT.

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