Oracle shares were higher on Monday after the company disclosed plans to raise between $45 billion and $50 billion in funding as it accelerates investment in cloud infrastructure designed to support artificial intelligence workloads.
The stock climbed about 2.5% as investors digested details of the financing strategy, which underscores the scale of Oracle’s ambitions in cloud computing and the growing scrutiny surrounding how AI-driven expansion will be funded.
Funding plan puts spotlight on debt markets
In a statement released late Sunday, Oracle said it intends to complete a single, one-time issuance of investment-grade senior unsecured bonds early in 2026.
Roughly half of the total funding planned for the year will come from debt, with the remainder raised through equity-linked and common equity issuances.
“Oracle intends to complete a single, one-time issuance of investment-grade senior unsecured bonds early in 2026,” the company said, adding that it plans a “balanced combination of debt and equity financing” for the year while maintaining an investment-grade balance sheet.
Oracle already carries a substantial debt load. As of November, the company had around $100 billion in long-term debt, according to FactSet.
That level of borrowing has turned Oracle’s credit into a closely watched indicator of investor confidence in the durability of the AI investment cycle.
Fitch Rating on Oracle stock
Fitch Ratings assigned Oracle’s proposed benchmark-size unsecured bonds a ‘BBB’ rating, while maintaining the company’s long-term and short-term issuer default ratings at ‘BBB’ and ‘F2’, respectively, with a stable outlook.
The rating upgrade also helped lift the sentiment around the stock.
The rating agency forecasts that Oracle’s EBITDA leverage will exceed 3.5 times in fiscal 2026, before declining in fiscal 2027 and 2028 as incremental revenue and earnings from AI compute investments begin to materialise.
Fitch also expects negative pre-dividend free cash flow to exceed $26 billion in fiscal 2026 and $18 billion in fiscal 2027.
As of the second quarter of fiscal 2026, Oracle reported approximately $20 billion in cash, cash equivalents and marketable securities, with about 80% of revenue coming from recurring sources.
Credit stress reflects investor unease
Concerns about the sustainability of heavy AI-related capital spending have pushed up the cost of insuring Oracle’s debt.
Five-year credit default swaps on Oracle trade at around 153.90 basis points, according to FactSet.
That means it costs roughly $153.90 annually to insure $10,000 of Oracle debt, compared with about $40 at the end of July last year.
The rise has drawn comparisons to periods of market stress, with demand for default protection intensifying as Oracle’s borrowing surged and Wall Street debated whether the rapid expansion of AI infrastructure could ultimately overshoot demand.
Credit rating agencies have also turned more cautious. S&P and Moody’s have both issued negative outlooks on Oracle in recent months, citing the impact of large-scale cloud investment on free cash flow.
AI contracts drive capital needs
Oracle said the capital raise is intended to fund additional capacity to meet contracted demand from its largest cloud customers.
Those customers include major technology and AI-focused companies such as Advanced Micro Devices, Meta Platforms, Nvidia, OpenAI, TikTok and xAI, according to the company.
A central pillar of Oracle’s AI strategy is its contract with OpenAI, which has committed to spending about $300 billion to rent servers from Oracle over time.
While the agreement provides long-term revenue visibility, OpenAI is not profitable, a factor that has added to investor concerns about the strain of massive upfront capital expenditures without a clear timeline for cash returns.
The post Why Oracle stock is up around 3% today appeared first on Invezz