This article first appeared on GuruFocus.

Oracle (NYSE:ORCL) has priced a $20 billion stock-and-bond offering as it raises fresh capital to fund its expanding AI and cloud infrastructure push.

The financing is split evenly between equity and debt. Oracle is selling about 86.2 million shares at $116 each, raising roughly $10 billion. That price represents an 11.2% discount to its previous close of $130.67.

The other $10 billion will come from fixed-rate bonds maturing between 2029 and 2046, carrying interest rates ranging from roughly 7% to 8.65%.

Shares fell 8.8% after the financing announcement, extending their year-to-date decline to roughly 39%.

The size of the raise reflects just how aggressive Oracle’s AI expansion has become.

The company is targeting at least $225 billion in revenue by fiscal 2030, more than triple its fiscal 2026 revenue base, as it builds out cloud capacity for AI customers. Oracle says free cash flow should turn positive again in the second half of fiscal 2028 and reach at least $30 billion in fiscal 2029.

But those ambitions come with an enormous funding requirement.

Oracle reported about $125.34 billion in borrowings as of Aug. 31, while additional lease commitments totaled roughly $288 billion, substantially tied to data-center infrastructure.

The company said proceeds from the offering could be used for capital expenditures and other corporate purposes, including debt repayment, acquisitions, dividends and share repurchases. Oracle has also said it intends to limit additional capital-market funding for its fiscal 2027 through fiscal 2030 investment cycle to this $20 billion, excluding refinancing.

Investor Takeaway

I think the biggest issue here is not simply dilution.

It is the cost of keeping Oracle in the AI infrastructure race.

Selling stock at an 11.2% discount hurts existing shareholders, while issuing bonds at rates as high as 8.65% shows that debt capital is not particularly cheap either.

That raises the bar for Oracle’s cloud buildout.

The company needs AI and cloud revenue to scale quickly enough to justify the debt, leases and equity dilution required to fund the expansion.

For investors, the key things to watch are OCI growth, capex, free cash flow, debt levels, lease obligations and whether Oracle can stick to its pledge to avoid additional growth financing through 2030.

Oracle is still betting very aggressively on AI.

This $20 billion raise shows just how expensive that bet has become.