Oracle Shares Fall 5% as AI Financing Plans Draw Scrutiny
Oracle shares fell 5% after OpenAI disclosed softer revenue and a report said technology companies were preparing to borrow to finance AI infrastructure…
Oracle shares fell 5% on Thursday as the oracle stock price came under pressure from softer OpenAI revenue and reports that technology companies are preparing to borrow to fund artificial intelligence infrastructure. The developments put attention on how Oracle will finance its data center expansion while serving one of its largest cloud customers.
The company is reportedly in talks with Apollo and Goldman Sachs over a financing arrangement and wants a deal completed as soon as this year, according to Yahoo Finance. Under the proposed structure, investors would fund a separate company that buys chips, which Oracle would lease over time rather than borrow more money directly.
The financing talks are not final. Oracle’s spending makes the stakes clear.
Oracle’s capital spending reached $28.5 billion in the June-to-August quarter, compared with $2.3 billion in the same quarter two years earlier. Its stock has fallen nearly 30% this year amid the spending push, according to Yahoo Finance.
OpenAI’s annualized revenue is reportedly $20 billion below earlier estimates. The disclosure added pressure to Oracle shares because OpenAI is among Oracle’s biggest cloud customers. Oracle builds data centers for the AI company, and its contract backlog stood at $664 billion last quarter.
Oracle stock price and AI financing plans
The proposed chip arrangement would shift some of the borrowing away from Oracle itself. Investors would finance the separate company’s chip purchases, while Oracle would lease the equipment over time. Yahoo Finance reported that the company wants the deal done as soon as this year, but did not say that an agreement had been reached.
The Wall Street Journal report also identified Broadcom and SpaceX as companies pursuing similar financing deals. The plans reflect the scale of the infrastructure costs facing technology companies seeking to expand AI capacity, while Oracle’s large customer commitments make its funding choices particularly consequential for investors.
For Oracle, the balance is concrete: spending on infrastructure has risen sharply, and its relationship with OpenAI ties future cloud demand to a customer whose revenue has reportedly fallen short of prior estimates. That combination can influence how investors assess the company’s borrowing needs and the value of its long-term contracts.
Debt is already a major part of the picture. Bloomberg reported Saturday that Oracle had nearly doubled its long-term debt to more than $160 billion over the past two years, making it the fifth-largest borrower in the U.S. corporate bond market. The report’s figure adds to investor scrutiny of plans to finance further chip and data center purchases.
Oracle’s Larry Ellison, who owns roughly 40% of the company, also backed Paramount’s acquisition of Warner Bros. Discovery. Skydance, the company led by his son David Ellison as co-CEO, took on $52 billion of additional debt last week, Yahoo Finance reported.
Oracle has not, in the supplied reporting, disclosed a completed deal with Apollo or Goldman Sachs. Investors will be watching whether the reported discussions produce a financing structure that supports its chip needs without adding more borrowing directly to the company.
Source: finance.yahoo.com
