By Rashika Singh<\/p>\n
Feb 2 (Reuters) – Oracle shares fell about 4% in premarket trading on Monday, after it outlined plans to raise $45 billion \u200bto $50 billion this year to expand its cloud infrastructure, fueling investor \u200cconcerns about its rising debt load.<\/p>\n
The software company, chaired by billionaire Larry Ellison, said the \u200cfundraising was aimed at expanding cloud capacity to meet contracted demand from major customers such as AMD, Meta, Nvidia<\/a>, OpenAI<\/a>, TikTok and xAI.<\/p>\n<\/p>\n While companies continue to ramp up capacity despite limited visibility into potential returns, investors are concerned whether a \u2060surge in artificial intelligence-related \u200cspending across the technology sector would generate sustained demand.<\/p>\n “The perception is that Oracle’s fortunes are now heavily tied to OpenAI \u200dand combined with the company’s plans to raise up to $50 billion to invest in 2026, nervousness about the situation looks unlikely to go away any time soon,” said Russ \u200bMould, investment director at AJ Bell.<\/p>\n Oracle said it aims to meet the \u200cfunding target through a roughly even mix of equity and debt, including equity-linked securities, common stock and a new at-the-market program of up to $20 billion, along with issuance of senior unsecured bonds planned for early next year.<\/p>\n Bernstein analysts said the mix of debt and equity should support Oracle’s investment-grade credit \u2060rating and reduce uncertainty around the timing and \u200bcost of future financing.<\/p>\n The company faces heightened \u200bscrutiny after a recent bondholder lawsuit in January and last year’s spike in its credit default swap costs.<\/p>\n The cost of insuring \u200dOracle’s debt against default \u2060surged in December last year to its highest in at least five years.<\/p>\n Jefferies analysts said the financing plan “buys time” for Oracle’s AI ambitions, \u2060but warned it could weigh on margins in the near term, and said free cash \u200cflow was unlikely to turn positive until FY29.<\/p>\n (Reporting by Rashika Singh \u200cin Bengaluru; Editing by Shilpi Majumdar)<\/p>\n","protected":false},"excerpt":{"rendered":"By Rashika Singh Feb 2 (Reuters) – Oracle shares fell about 4% in premarket trading on Monday, after…\n","protected":false},"author":3,"featured_media":561007,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[21],"tags":[691,738,47016,92329,78742,19781,158,67,132,68],"class_list":["post-561006","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-cloud-infrastructure","tag-larry-ellison","tag-premarket-trading","tag-software-company","tag-technology","tag-united-states","tag-unitedstates","tag-us"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116001303732331571","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/561006","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=561006"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/561006\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/561007"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=561006"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=561006"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=561006"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}