Oracle Seeks Massive Funding to Fuel AI Cloud Expansion

The technology giant Oracle is preparing a substantial capital raise to power its ambitious artificial intelligence infrastructure plans. According to investor communications, the company intends to secure between $45 and $50 billion in funding during 2026. This move is designed to rapidly scale its cloud capacity to meet surging, contractually committed demand, though it arrives amid growing investor scrutiny over soaring AI sector investments.

Oracle has outlined a balanced financing strategy that leverages both equity and debt instruments. Approximately half of the targeted amount is expected to be raised through equity-like vehicles and new share issuance. This portion includes mandatory convertible preferred securities and a newly authorized "at-the-market" (ATM) equity program. The ATM facility provides flexibility to issue shares directly into the market and has been approved for a total size of up to $20 billion.

The remaining financing will come from the debt markets. Plans call for a single issuance of senior, unsecured bonds carrying an investment-grade rating early in 2026. Investment bank Goldman Sachs is leading the bond offering, while Citigroup is managing the ATM program and the mandatory convertible securities. Company statements emphasize a commitment to preserving its investment-grade status throughout this expansion phase.

Market Context: Sector-Wide Scrutiny on Spending

This announcement comes at a time of heightened market skepticism toward the enormous capital expenditures required for artificial intelligence. The sheer scale of investment in data centers, semiconductors, and supporting infrastructure has placed several major tech stocks under pressure, including Microsoft, Nvidia, Meta, Amazon, Alphabet, and Oracle itself.

A central concern among investors is the timeline for these massive outlays to translate into tangible revenue growth and profitability. The sector's aggressive spending is being closely watched, with markets questioning the pace of return on investment.

Should investors sell immediately? Or is it worth buying Oracle?

Operational Performance Justifies Growth Plans

Oracle's recent financial results provide the backdrop for its aggressive expansion strategy. In its report for the second quarter of fiscal year 2026 (published in December), the company's cloud business demonstrated significant momentum.

Total revenue reached $16.1 billion, representing a 14% year-over-year increase. Cloud revenue (IaaS + SaaS) jumped to $8.0 billion, a growth of 34%. The standout performer was Cloud Infrastructure (IaaS), which surged to $4.1 billion, marking an impressive 68% gain.

A key metric receiving increased attention is Remaining Performance Obligations (RPO), which reflects contracted future revenue not yet recognized. This figure ballooned to $523 billion, a staggering increase of 438%. Oracle attributed this growth to new commitments from major clients, including Meta and Nvidia.

This enormous backlog now presents the critical question for the market: How rapidly can Oracle convert these contractual promises into recognized sales? All eyes are now on the upcoming quarterly report, scheduled for release tomorrow, which will detail the company's performance for Q3 of fiscal year 2026.

Key Financial Details:
- Planned 2026 Capital Raise: $45–50 billion
- Primary Use of Funds: Expansion of Oracle Cloud Infrastructure (OCI) to fulfill contractually committed demand
- Next Quarterly Report: Expected tomorrow (Q3 FY 2026 results)