Oracle (ORCL) stock fell on Thursday following a Wall Street Journal report detailing how the enterprise cloud provider and other tech companies are preparing to tap debt markets to fund the ongoing AI infrastructure build-out.
Oracle is reportedly in talks with Apollo (APO) and Goldman Sachs (GS) to arrange financing and wants a deal done as soon as this year. The deal would likely have investors fund a separate company that buys the chips, which Oracle would lease over time to avoid borrowing more money itself. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)
Broadcom (AVGO) and SpaceX (SPCX) were also mentioned by WSJ as pursuing similar deals.
135.93 -7.63 (-5.31%)
As of 2:41:16 PM EDT. Market Open.
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Oracle stock is down nearly 30% this year amid the AI infrastructure build-out. Oracle’s capital spending hit $28.5 billion in the June-to-August quarter, up from $2.3 billion in the same quarter two years earlier.
Adding further pressure, OpenAI’s (OPAI.PVT) annualized revenue is reportedly $20 billion short of prior estimates. OpenAI is one of Oracle’s biggest cloud customers: Oracle builds data centers for the AI lab, and the contract backlog stood at $664 billion last quarter.
Much of that has been paid for with bonds: Oracle “has nearly doubled its long-term debt to more than $160 billion over the past two years,” Bloomberg reported Saturday, and the company now ranks as the fifth-largest borrower in the US corporate bond market.
Larry Ellison, who owns roughly 40% of Oracle, also backed Paramount’s acquisition of Warner Bros. Discovery. That company, Skydance (SKYD), took on $52 billion of additional debt last week. David Ellison, Larry’s son, is co-CEO of Skydance.
Daniel Howley contributed to this report.
Internal AI tools help analyze data and draft. Editors reviewed, edited, and fact-checked this post before publication.
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