Oracle Seeks $15 Billion in Bond Sale Amid AI Expansion
Oracle (ORCL) is reportedly seeking to raise $15 billion through the U.S. corporate bond market to fund its expanding cloud infrastructure, particularly related to its burgeoning artificial intelligence (AI) initiatives. This move comes as Oracle solidifies significant partnerships with companies like OpenAI and experiences a surge in demand for cloud computing resources.
Strategic Bond Issuance for AI Growth
According to a Bloomberg report, Oracle is offering the debt in as many as seven parts, including a 40-year bond. Initial price discussions for the 40-year tranche are around 1.65 percentage points above similarly dated Treasuries. This financing strategy underscores Oracle's aggressive capital expenditure plans aimed at constructing data centers to support AI workloads.
Key Deals and Leadership Changes
This bond sale arrives shortly after Oracle reportedly secured a massive $300 billion compute deal with OpenAI. Questions arose immediately concerning how the deal would be financed. Oracle is also reportedly in talks with Meta for a potential $20 billion compute deal.
Simultaneously, Oracle recently underwent significant leadership changes, with Safra Catz transitioning from CEO to Executive Vice Chair of the Board. She was replaced by co-CEOs Clay Magouyrk and Mike Sicilia. Magouyrk is taking the lead with a $250 million stock package, while Sicilia gets $100 million. This change occurred after Oracle secured the OpenAI deal and neared keeping TikTok as a cloud client.
Massive Data Center Push with OpenAI and SoftBank
OpenAI, Oracle, and SoftBank are reportedly investing $400 billion in new U.S. data center builds, including five sites across Texas, New Mexico, and Ohio. These sites will carry 7 gigawatts of power. This is part of "Stargate," an infrastructure project being developed by Oracle and OpenAI. This expansion is part of a larger $500 billion pledge made after Donald Trump's return to the White House, designed to support OpenAI's growing needs, including ChatGPT.
Market Reactions and Future Outlook
While Oracle's stock initially soared following the OpenAI deal, the bond sale announcement coincided with a slight dip in share price, attributed to broader market fluctuations. Analysts suggest this could be a strategic move to secure favorable borrowing costs before potential Federal Reserve rate adjustments. The bond market's reception to Oracle’s debt offering will be closely watched as a gauge of investor confidence in tech's high-stakes infrastructure investments.
