Oracle shares slide as $50 billion AI funding plan raises debt concerns

Key Highlights

  • Oracle stock slipped from a previous close of $169.01 to around $164.58
  • Oracle shares fell over 4% in premarket trade after unveiling a massive AI funding plan
  • The company plans to raise up to $50 billion in 2026 to expand cloud infrastructure
  • Investors are weighing AI demand visibility against rising debt and margin pressure

Oracle shares slipped sharply in premarket trading on February 2 after the company outlined plans to raise up to $50 billion this year to fund its cloud and AI expansion. The stock fell around 4%, moving from a previous closing price of $169.01 to nearly $164.58.

The move matters because it highlights growing investor caution around aggressive AI spending, especially when returns remain uncertain.

What exactly did Oracle announce?

Oracle said it plans to raise between $45 billion and $50 billion in 2026 to expand its cloud infrastructure. The goal is to meet rising contracted demand from large AI and technology customers, including AMD, Meta, Nvidia, OpenAI, TikTok, and xAI.

The company said the funding will come from a balanced mix of equity and debt. This includes equity-linked securities, common stock issuance, a new at-the-market equity programme of up to $20 billion, and senior unsecured bonds expected early next year.

Why are investors worried about Oracle?

Markets reacted negatively as investors assessed the scale and timing of the funding plan. While AI demand continues to rise, visibility on long-term returns remains limited.

Analysts note that Oracle’s growing exposure to AI workloads, especially those linked to OpenAI, increases concentration risk. The planned fundraising also raises concerns about higher debt levels and near-term margin pressure.

Oracle is already under scrutiny after a bondholder lawsuit earlier this year and a sharp rise in credit default swap costs late last year. The cost of insuring Oracle’s debt reportedly climbed to its highest level in at least five years in December.

Can Oracle manage the balance between growth and risk?

Some analysts believe Oracle’s funding mix should help preserve its investment-grade credit rating and reduce uncertainty around future financing costs. However, others warn that heavy capital spending could weigh on free cash flow in the near term.

Jefferies analysts said the plan “buys time” for Oracle’s AI ambitions but cautioned that free cash flow may not turn positive until fiscal 2029.

What this means for Oracle and the AI market

For Oracle, the funding plan signals a clear bet on AI-led cloud growth. For markets, it reflects a broader shift from excitement to scrutiny around big-ticket AI investments.

As investors reassess valuations across the sector, Oracle’s strategy will remain closely watched. Oracle now sits at the centre of the AI infrastructure race, but its stock reaction shows that scale alone is no longer enough.

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