Oracle (ORCL) is doubling down on artificial intelligence infrastructure, raising billions in fresh debt while joining forces with OpenAI and SoftBank (SOFI) to build massive U.S. data centers under the ambitious Stargate Project.
Key Points
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Oracle plans to raise $15 billion through a multi-part bond sale, including a rare 40-year bond, to fund AI cloud infrastructure.
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The Stargate Project now totals $400 billion in investment and nearly 7 GW of planned capacity, on track to hit its $500 billion goal ahead of schedule.
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Despite near-term cash flow pressure, Oracle stock has surged 97% year-to-date, outperforming Nvidia (NVDA) and cementing its role in the AI race.
Why Is Oracle Raising $15 Billion Now?
Oracle is tapping the bond market for $15 billion, one of its largest debt offerings ever, to support massive spending on AI-related cloud infrastructure. Proceeds may go toward data center construction, acquisitions, or debt repayment.
This move comes as Oracle ramps up delivery of contracts with OpenAI and Meta (META). The company is selling the debt in up to seven tranches, including a rare 40-year bond, signaling confidence that its long-term AI strategy justifies higher leverage.
Oracle already holds about $95 billion in long-term debt. Analysts note that while leverage will rise, its high-grade credit rating is likely safe.
What Is the Stargate Project and Why Does It Matter?
The Stargate Project is one of the largest AI infrastructure initiatives in history. Backed by Oracle, OpenAI, and SoftBank, the project has attracted nearly $400 billion in commitments and plans for 10 gigawatts of AI data center capacity by 2025.
Five new U.S. sites were unveiled this week, including locations in Texas, New Mexico, and Ohio. Together, they will add more than 5.5 GW of compute power and create 25,000 jobs.
AI workloads are extremely energy-intensive, requiring specialized infrastructure. OpenAI CEO Sam Altman emphasized that “AI is different from the internet” because of its extraordinary infrastructure needs. Oracle’s role as the backbone provider of GPU-rich data centers positions it at the center of this growth.
How Is Oracle Competing in the AI Cloud Market?
Instead of building chips like Nvidia or chasing flashy AI apps, Oracle has carved out a niche: GPU-as-a-service. The company rents access to high-performance Nvidia GPUs via Oracle Cloud Infrastructure (OCI).
This model solves a critical bottleneck — most companies can’t procure enough GPUs for large-scale AI training. By offering on-demand compute capacity, Oracle has won contracts with OpenAI, xAI, and ByteDance (TikTok’s parent).
The payoff has been huge. Oracle’s remaining performance obligations (future contracted revenue) hit a record $455 billion. Its stock has soared nearly 100% this year, outpacing even Nvidia.
What It Means for Investors
For investors, Oracle’s strategy highlights both opportunity and risk:
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Upside: Oracle is tied directly to the AI boom. Its GPU rental model and massive data center buildout are in high demand.
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Risk: Cash flow flipped negative for the first time since 1992, and analysts don’t expect it to recover until 2029. The market may be pricing in too much future success too soon, given Oracle’s elevated valuation.
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Big Picture: Oracle has reinvented itself as a critical player in AI infrastructure, but execution and profitability remain the key watchpoints.
Conclusion
Oracle is making an audacious bet: spend heavily now to dominate AI infrastructure later. With Stargate accelerating ahead of schedule and $15 billion in fresh funding secured, Oracle has momentum on its side. For investors, the question is whether this bold expansion will pay off before mounting debt and cash burn test the company’s financial resilience.
FAQs
Why is Oracle borrowing $15 billion?
Oracle is raising $15 billion through bonds to fund AI cloud infrastructure projects, including massive data centers built with OpenAI and SoftBank. The money may also be used for acquisitions or debt repayment.
What is the Stargate Project?
The Stargate Project is a $500 billion U.S. initiative to build 10 gigawatts of AI data center capacity by 2025. Backed by Oracle, OpenAI, and SoftBank, it has already reached $400 billion in commitments and nearly 7 GW in planned capacity.
Is Oracle stock a good buy right now?
Oracle stock is up nearly 100% in 2025, outpacing Nvidia. While the company is well-positioned in AI, its valuation is stretched, and cash flow has turned negative. Investors should weigh long-term potential against near-term risks.
How does Oracle’s AI strategy compare to Nvidia’s?
Nvidia designs the chips powering AI workloads, while Oracle provides the infrastructure to rent and scale those chips through its cloud. Oracle’s GPU-as-a-service model makes it a key enabler of AI, but Nvidia remains the hardware leader.
When will Oracle’s AI investments start paying off?
Analysts expect Oracle’s cash flow to remain under pressure until at least 2029 as it spends heavily on infrastructure. The payoff depends on sustained demand for AI compute and the company’s ability to monetize long-term contracts.