Oracle stock slipped Wednesday following an announcement from OpenAI that detailed plans for five data center sites for the Stargate AI infrastructure effort. Separately, Bloomberg reported that Oracle will look to raise $15 billion through the bond market to fund its AI cloud ambitions.
OpenAI said late Tuesday that it would work with Oracle and tech investment giant SoftBank to build large-scale data centers in Lordstown, Ohio; Milam County, Texas; Shackelford, Texas; Dona Ana County, N.M.; and a site in the Midwest to be named later. The projects bring the Stargate initiative's spending commitment to more than $400 billion over the next three years, according to OpenAI's announcement. Stargate also includes a large data center in Abilene, Texas, the announcement noted.
The Stargate initiative committed to $500 billion in AI infrastructure investment when it was first announced in January, through a press conference at the White House featuring President Donald Trump and leaders of three companies.
Oracle will develop the sites and rent the cloud-computing capacity through its Oracle Cloud Infrastructure business to OpenAI. The ChatGPT creator needs huge amount of computing power to train and operate its AI models.
Oracle stock surged earlier this month after it reported fiscal first-quarter earnings and revealed its backlog of cloud-related work had reached $455 billion in contracted revenue as of August, a 359% jump from a year earlier. OpenAI is considered a major contributor to that growth. The startup signed a five-year deal with Oracle valued at $300 billion for cloud computing services, according to a Wall Street Journal report on Sept. 10.
Oracle Reportedly Tapping Bond Market For AI Buildout
A big question mark is how Oracle will fund the data center construction required to meet that demand. Analysts project Oracle will spend $34.2 billion on capital expenditures during its current fiscal year, according to FactSet, up from $21.2 billion and $6.9 billion in its two previous May-ended fiscal years.
On that note, Bloomberg reported that Oracle is seeking to borrow $15 billion through corporate bonds. Oracle did not immediately respond to a request for comment on the report, which cited unnamed sources. The company is looking to sell debt in as many as seven parts, including a 40-year bond, according to the Bloomberg report.
Analysts have told clients through notes in recent weeks that they expect Oracle will need debt to fund its AI ambitions. Evercore ISI analyst Kirk Materne acknowledged the Bloomberg bond report in a daily update note to clients on Wednesday morning.
"We remain very bullish on Oracle's growth opportunity in OCI and believe that OCI is well-positioned to be a core cloud infrastructure leader over the next several years, though we acknowledge that this will require many infrastructure investments," Materne wrote. He rates Oracle stock as outperform.
Oracle Stock Ahead More Than 80% In 2025
On the stock market today, Oracle stock shed more than 1.7% to close at 308.46.
The action Wednesday continues an eventful week for Oracle stock. Shares jumped 6% on Monday after the company named a pair of chief executives to replace previous leader Safra Catz, who shifted to executive vice chair of Oracle's board. The company named Clay Magouyrk and Mike Sicilia as dual CEOs. Magouyrk was previously president of Oracle's cloud infrastructure business while Sicilia was Oracle Industries president.
Also on Monday, White House officials said a deal was close to shift TikTok to a U.S. ownership group. Oracle would be part of that group and oversee Oracle's data and other parts of the operations.
But shares have pulled back since then, with a 4.4% decline in Tuesday trading.
Still, Oracle stock is ahead 85% overall year to date, with a roughly 35% gain since the start of the month.
