By skyforbes Therefore, Oracle may only need to issue $25 billion to $35 billion in debt to fund its AI infrastructure development. While this additional debt issuance would come on top of the company's recent $18 billion bond offering, it remains far below the $100 billion level that had investors concerned.
It's worth noting that given Oracle's high profit margins in its cloud infrastructure business, we also have reason to believe the company can withstand a higher debt burden. Management could also explore alternative financing solutions (such as vendor financing) to alleviate upfront cash outlay pressures. Many institutions have already assigned Oracle an “Overweight” rating, but due to increased capital expenditures and currency fluctuations, some have lowered their target price from $430 to $390.
Furthermore, the market currently prices Oracle's collaboration with OpenAI at only a “minimal upside.” This can be calculated: approximately 84% of Oracle's current market capitalization is supported by its non AI businesses. Estimates suggest Oracle's cloud infrastructure business could contribute approximately $13 per share to earnings by fiscal year 2027. This implies significant upside potential should the cloud infrastructure business approach its targets.