Oracle to Raise Up to $50B in 2026 as Musk's In Talks to Combine SpaceX, xAI

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Bloomberg's Mandep Singh joins to discuss the biggest news in the tech sector on Bloomberg Intelligence. Oracle Corp. plans to raise $45 billion to $50 billion this year through a combination of debt and equity sales to build additional cloud infrastructure capacity, reflecting the scale of financing needed to feed AI’s growth.   Elon Musk is in advanced talks to combine Space Exploration Technologies Corp. with xAI, according to people familiar with the matter, underscoring how the billionaire’s artificial intelligence ambitions have grown too costly for any one of his entities to shoulder alone.  Oracle Corp. is selling bonds on Monday to help finance infrastructure that powers artificial intelligence projects, in what could be the biggest high-grade US offering since Meta Platforms Inc. raised $30 billion late last year. The software giant is expected to borrow between $20 billion and $25 billion and raise about the same amount through equity sales, according to people with knowledge of the matter who asked not to be identified because they’re not authorized to speak publicly.  Money managers viewed the company’s decision to raise equity in addition to debt as a positive, amid concerns about the firm’s debt levels and a possible artificial intelligence bubble. Oracle’s plan to use the “equity bazooka” significantly reduces the downside risk for its credit, Barclays analysts Andrew Keches and Remy Neuhaus wrote in a note dated Feb. 2. Moodys Ratings affirmed Oracle’s debt grade at Baa2, the second lowest investment-grade level.   As of mid-day in New York, demand for the bonds appeared relatively strong: investors had placed at least $126 billion of orders for the bonds, according to people with knowledge of the transaction, which would represent an all-time high. The prior record for orders was $125 billion for Meta Platforms Inc.’s sale of $30 billion bonds in October.    The company doesn’t expect to sell more debt in 2026, according to a statement. Bond investors had estimated that Oracle would sell between $40 billion and $60 billion in debt this year. Oracle is raising equity in the form of equity-linked securities and common stock offerings. The common share sales will come in the form of an at-the-market offering that would allow it to raise as much as $20 billion in sales over time. The company also seeks to raise about $5 billion from its mandatory convertible preferred bond, according to people familiar with the matter. Citigroup Inc. and a group of banks are marketing the issue with a 6.25% to 7.25% dividend, the people said. A representative for Oracle referred Bloomberg to the company’s press statement. Shares of Oracle rose 2.2% as of 12:30 p.m. in New York. Its long-dated bonds rallied in the secondary market and a measure of the Oracle’s credit risk eased the most since April 2021 following the announcement of the bond offering. Tech companies are poised to borrow heavily this year to finance AI infrastructure. International Business Machines Corp. sold nearly $7.5 billion in dollar and euro bonds last week and more firms could follow in the coming weeks after they report earnings. February and March are typically some of the busiest months for sector but the next two months will be even more active than usual, according to JPMorgan Chase & Co. credit strategist Nathaniel Rosenbaum. -------- Watch Bloomberg Radio LIVE on YouTube Weekdays 7am-6pm ET WATCH HERE: http://bit.ly/3vTiACF Follow us on X: https://twitter.com/BloombergRadio Subscribe to our Podcasts: Bloomberg Daybreak: http://bit.ly/3DWYoAN Bloomberg Surveillance: http://bit.ly/3OPtReI Bloomberg Intelligence: http://bit.ly/3YrBfOi Balance of Power: http://bit.ly/3OO8eLC Bloomberg Businessweek: http://bit.ly/3IPl60i Listen on Apple CarPlay and Android Auto with the Bloomberg Business app: Apple CarPlay: https://apple.co/486mghI Android Auto: https://bit.ly/49benZy Visit our YouTube channels: Bloomberg Podcasts: https://www.youtube.com/bloombergpodcasts Bloomberg Television: https://www.youtube.com/@markets Bloomberg Originals: https://www.youtube.com/bloomberg Quicktake: https://www.youtube.com/@BloombergQuicktake