Oracle adds underwriters for $20B placement as AI capex strains balance sheet

Oracle Corp. added underwriting institutions for its $20 billion stock placement, the latest capital raise to fund an AI infrastructure buildout that pushed free cash flow negative last quarter.

The company is expanding the syndicate of banks selling new shares as part of a previously announced $20 billion equity offering, according to a person familiar with the matter. Oracle disclosed in its annual filing that it plans to raise a total of $40 billion through debt and equity financing to support what it expects will be $70 billion in net capital expenditure during the current fiscal year.

The stock placement comes as Oracle's workforce shrank by 21,000 employees over the past 12 months to 141,000, with the company acknowledging in its annual filing that artificial intelligence adoption contributed to job reductions. Oracle spent $1.84 billion on severance and restructuring costs in fiscal 2026, up from $374 million a year earlier.

Shares of Oracle closed at $184.29 on Friday, down 4.9% year to date and 46.3% below the 52-week high of $343.01. The stock trades at roughly 20 times forward earnings, a discount to cloud peers, as investors weigh the dilution from the equity offering against the company's AI growth prospects.

Oracle's cloud infrastructure revenue surged 93% year over year in the fiscal fourth quarter, and remaining performance obligations hit $638 billion. But the capital-intensive nature of the business swung free cash flow to negative $23.69 billion in fiscal 2026 on $55.66 billion of capital expenditure.

The $20 billion stock placement will dilute existing shareholders by roughly 8% based on current market capitalization of about $250 billion. The company's landmark cloud agreement with OpenAI, reported to be worth hundreds of billions of dollars over its lifetime, has driven much of the urgency to expand data center capacity.

For existing holders, the near-term dilution is the price of Oracle's bet that AI infrastructure demand will compound at a 28% annual earnings growth rate through fiscal 2030, as management has guided. Investors will watch for the pricing of the stock placement and any updates on the company's debt raise in the coming weeks.

This article is for informational purposes only and does not constitute investment advice.