Oracle Maintains Capital Raising Plans Amid AI Infrastructure Spending

Oracle has announced that its plans to raise capital will not be impacted despite significant expenditures on artificial intelligence infrastructure. The company is currently undergoing one of the largest infrastructure expansions in the enterprise technology sector, driven by increasing demand for AI capabilities.

In fiscal 2026, Oracle's capital expenditures reached $55.7 billion, exceeding its initial target of $50 billion by over 10%. This comes in the context of a reported negative free cash flow of approximately $23.7 billion for the same fiscal year, which ended on May 31. Oracle's remaining performance obligations, which represent its contracted backlog, stood at $638 billion, including contracts with major firms such as OpenAI, Meta, and Nvidia.

For calendar year 2026, Oracle plans to raise between $45 billion and $50 billion through a combination of debt and equity, with a significant portion anchored by a $25 billion bond offering. The company is also projecting net cash capital expenditures of around $70 billion for fiscal 2027, with gross spending potentially reaching $95 billion, necessitating an additional $40 billion in funding.

Currently rated at BBB-, Oracle's credit rating is at the lowest level of investment-grade status. The company's debt-to-EBITDA ratio has surpassed 4x, prompting management to commit to maintaining its investment-grade rating. This commitment is crucial, as a downgrade could significantly alter the terms of its financing strategy, making borrowing more expensive. The upcoming fiscal 2027 spending targets and the success of the planned fundraising will be critical indicators of Oracle's financial health moving forward.

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Source: KLEA News