Oracle Stock Sell-Off: $20 Billion Raise at Up to 8.65% Tests AI Debt

The Oracle stock sell-off deepened on Monday, November 2, when the company filed to raise $20 billion, half in new shares and half in bonds, to pay for its AI data center build-out. It priced the stock at $116, about 11% below Friday's close, and paid coupons of up to 8.65% on the debt. The deal is a live test of how much investors will charge to fund AI infrastructure that has not yet paid for itself.

Oracle shares fell nearly 9% on Monday to about $119, according to Yahoo Finance and TNW, and have lost roughly $65 billion of market value since the October 28 investor day, The Motley Fool and investingLive calculated. They rebounded about 6% on Tuesday, Investing.com reported, as investors treated the completed raise as the end of an overhang.

$20B

Total raise: $10B stock, $10B bonds

11.2%

Discount on 86.2M new shares at $116

8.65%

Coupon on the 2046 bonds

~$65B

Market value lost since Oct 28

The deal: 86.2 million shares and five bond tranches

Oracle sold about 86.2 million new shares at $116 each, an 11.2% discount to the October 30 close of $130.67, Yahoo Finance reported, citing Bloomberg. TNW put expected net proceeds at about $9.9 billion and reported, also citing Bloomberg, that demand for the shares exceeded the number on offer.

The $10 billion of senior notes came in five fixed-rate tranches maturing from 2029 to 2046, with coupons from 7% on the shortest notes to 8.65% on the longest, according to the pricing term sheet cited by TNW and Yahoo Finance. The largest piece was $2.5 billion of 2037 notes at 8%, TNW reported. A floating-rate tranche in the preliminary filing was dropped. Both offerings were scheduled to close on November 4.

Those coupons are high for a company with an investment-grade rating. Oracle's existing 6.85% bonds due 2066 fell more than 1.2 cents on the dollar as the new deal was marketed, Yahoo Finance reported, citing Tradeweb. When a company's new debt costs more, its older, lower-coupon debt is worth less.

Why Oracle needed the money

Oracle is building data centers for AI customers including OpenAI, Meta and Nvidia, Anadolu Agency reported. TNW said it spent $55.7 billion on data centers in the year to May 2026. In its fiscal first quarter, which ended August 31, free cash flow was negative $5.4 billion and interest expense rose 55% to $1.4 billion, according to 24/7 Wall St. Notes payable and other borrowings stood at $125.3 billion at the end of August, Yahoo Finance and TNW reported.

At its October 28 investor day, Oracle promised to cap additional capital raising through fiscal 2030 at $20 billion, split evenly between equity and debt and excluding refinancing. It said spending peaks in fiscal 2027 and 2028 and steps down in fiscal 2029, that free cash flow turns positive in the second half of fiscal 2028, and that revenue reaches more than $225 billion in fiscal 2030, up from $67.36 billion in fiscal 2026. Within a week, it used the whole $20 billion allowance.

Part of a wider wave of AI financing

Oracle is not alone in tapping markets. Microsoft ended a nearly three-month pause in Big Tech bond sales with a $25 billion offering, TipRanks reported, and Alphabet has sold a seven-part euro bond, which we covered in our Alphabet bond sale report. What sets Oracle apart is that it is paying twice: with dilution on the stock and coupons of 7% to 8.65% on the debt, while its free cash flow is negative. Its stock is down more than a third this year, according to TipRanks and TNW.

Oracle's revenue plan also leans heavily on OpenAI, which continues to operate at a loss, Yahoo Finance noted. That links Oracle's bondholders to the same private funding chain we described in our analysis of AI circular deals. Credit agencies are watching the same trend: S&P has cut its outlook on Meta to negative over AI spending, as we reported.

What the AI Bubble Index says

The AI Bubble Index read 63.3 at the November 3 close, in the Normal band, down from 64.4 a week earlier. Its Fragility axis, at 72.2, is clearly above Euphoria at 62.8, and the systemic risk family reads 71.8. Sentiment and attention stays the hottest family at 92.8, while the demand gap is the coolest at 39.6. See the full breakdown on the dashboard and how each family is built on the methodology page.

A gap between fragility and euphoria fits a market where prices have cooled but funding is getting harder. Oracle's 8.65% coupon is one data point, not a trend on its own. Our guide to AI investment risks explains how debt-funded capex adds risk to a tech boom.