Oracle will issue new shares worth $20 billion, its second major fundraising in just over a year, to support investments in cloud infrastructure for artificial intelligence. The decision comes after S&P downgraded its credit rating to just one step above speculative grade.
Oracle has announced a $20 billion capital increase through the issuance of new shares, according to market sources. This is the second move of this kind in just fifteen months, following the issuance of convertible preferred shares worth $5 billion in February 2026. The company aims to finance its transformation into a cloud infrastructure operator for artificial intelligence, a shift that requires massive investments.
The pressure on the balance sheet becomes unsustainable
The decision comes after S&P Global Ratings downgraded Oracle's credit rating from 'BBB' to 'BBB-', just one notch away from speculative grade. The agency estimates a free cash flow deficit of around $42 billion for the 2027 fiscal year. For that same year, Oracle expects capital investments between $90 billion and $95 billion, double what was projected twelve months ago.
The market has reacted harshly. Oracle's shares closed on Friday at €110.56, 1.79% higher than the previous day, but very close to the annual low of €105.10 recorded on July 17. In the last month, the value has lost 31%, and since the all-time high of €280.70 in September 2025, the decline exceeds 60%. The RSI of 29 places the stock in the technical oversold zone.
Dependence on OpenAI and regulatory hurdles in New Mexico
Oracle's backlog stands at $638 billion, a record figure. However, S&P warns that approximately half corresponds to a single client: OpenAI, the creator of ChatGPT. If the artificial intelligence developer fails to meet its multi-year commitments, Oracle could be left with enormous empty data centres. The agency classifies this concentration as a "central credit risk factor."
To the financial tension is added a regulatory hurdle. On July 17, authorities in New Mexico rejected the construction of a 27-kilometre gas pipeline that was to supply energy to the 'Jupiter Project', one of the largest data centre campuses planned by Oracle. The infrastructure, planned by Energy Transfer, was designed to power up to 2.5 gigawatts of Bloom Energy fuel cells. Regulators cited concerns over water consumption and emissions. The launch, initially scheduled for mid-August, could be delayed until 2027.
For a company that needs available capacity immediately to capture AI business, that delay is a significant blow. Oracle is transitioning from a high-margin software provider to a cloud infrastructure operator, and shareholders are increasingly footing the bill.
Dividends and valuation: the paradoxes of Oracle
Amid the storm, Oracle maintains its dividend policy. On July 10, 2026, the stock traded 'ex-dividend' with a quarterly payment of $0.50 per share. For income-oriented investors, this flow provides some relief, although the paradox of raising fresh capital while distributing dividends does not go unnoticed. The market capitalisation has shrunk to €312.74 billion, far from the levels of a year ago.
Consensus analysts set the target price at €220.14, nearly double the current level. Such a wide divergence between market price and fair valuation is unusual for a company the size of Oracle. It reflects the deep conflict between the optimistic view of equity analysts, who still see opportunities in the AI bet, and the reading of credit markets, which demand an ever-increasing premium for financing risk.
With the tech giant caught between a massive investment, excessive dependence on OpenAI, and regulatory hurdles in New Mexico, the recent capital increase does not resolve the underlying equation. The real test for Oracle will be to demonstrate that the order backlog converts to cash quickly enough to prevent debt from skyrocketing. Investors must closely monitor the upcoming quarterly results and the evolution of demand for cloud services for AI.
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