Oracle says it needs to raise $40bn to build more data centres

In short: Oracle says it needs to raise $40bn over the next year to help pay for building more data centres.

What happened

Oracle told investors it plans to raise $40bn in the next 12 months to fund a major build-out of data centres. Data centres are large buildings full of computers that power online services, including AI tools (think of them like factories that produce computing power).

The company said it expects to raise $20bn in its 2027 fiscal year, on top of another $20bn it plans to get through a previously announced share sale. The announcement worried some investors because Oracle did not increase its sales forecast for the next fiscal year, and kept it at about $90bn.

Oracle’s spending on long-term projects, mainly data centres, also rose sharply. It spent $16.5bn in the most recent quarter, bringing full-year capital spending to $55.7bn, higher than the $50bn it had guided earlier.

After the earnings report, Oracle shares fell more than 7% in after-hours trading, and were down as much as 8% at one point. This happened even though Oracle reported quarterly revenue of $19.2bn and full-year revenue of $67.4bn, both above expectations.

Oracle has been investing heavily after signing a $300bn deal with OpenAI last year to provide data centre capacity for ChatGPT. The company has also raised debt in recent months, and has cut more than 30,000 roles in the past quarter to reduce costs.

Why it matters

AI services need huge amounts of computing power, and that means more data centres and more upfront spending. For everyday users, these investments can affect how fast AI tools improve and how much they cost, but they also raise questions about how companies pay for the build-out and how risky that debt becomes.

Source: Financial Times