Oracle (ORCL) shares are trading lower after the software giant said it plans to raise $45 billion to $50 billion this year through a mix of debt and equity to expand its cloud business. Reportedly, the company is also weighing job cuts of around 20,000 to 30,000 employees, or roughly 10% of its workforce, as it looks to fund an aggressive AI and cloud expansion.
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The company said the funds will be used to expand cloud capacity to serve large customers such as Advanced Micro Devices (AMD), Meta (META), Nvidia (NVDA), as well as private companies including OpenAI, TikTok, and xAI. Demand from these clients remains strong, but the size of the capital raise caught investors’ attention.
Meanwhile, according to a report from CIO citing TD Cowen, the job cuts are aimed at freeing up $8 billion to $10 billion in cash flow, which Oracle needs to help fund its AI data center build-out and its $300 billion partnership with OpenAI. Oracle is also exploring asset sales as part of this effort. This includes a possible sale of parts of its business, such as its healthcare software unit Cerner, which it acquired in 2022 for $28.3 billion.
Why Investors Are Reacting
Investors are focused on how Oracle plans to fund its expansion. The company said about half of the $45–$50 billion would come from equity-linked and common equity, including mandatory convertibles and a new at-the-market program of up to $20 billion. The rest is expected to be raised through bond sales early next year.
That structure has made markets cautious. The equity portion raises dilution concerns, while the added debt puts more strain on the balance sheet. These worries stand out as Oracle ramps up spending on AI and cloud infrastructure.
Though AI demand remains strong, investors are questioning how quickly these large investments will turn into steady returns.
Is ORCL Stock a Good Investment?
On Wall Street, Oracle’s shares currently enjoy a Strong Buy consensus analyst rating. This is based on 24 Buys and eight Holds issued by 32 analysts over the past three months. Moreover, the average ORCL price target of $302.41 implies about 84% growth potential.
