OpenAI contract forces Oracle into billion-dollar loan

"Oracle will likely have to borrow huge sums of money in the coming years to fulfill its agreement with OpenAI. According to estimates by KeyBanc Capital Markets, the American software company will need approximately $100 billion in additional capital over the next four years. This is according to The Register. The money is needed to build the data centers and infrastructure required for a large-scale cloud contract with OpenAI."

"On September 11, OpenAI announced that it had signed an unprecedented $300 billion (€256 billion) contract with Oracle for computing power over five years. The deal, with a required capacity of 4.5 gigawatts, is one of the largest cloud contracts ever. The prospect of this revenue caused Oracle's stock price to rise sharply earlier this month. During the presentation of its quarterly figures for the first quarter of fiscal year 2026, the company reported that total contract commitments had increased by 359 percent."

"Despite the enormous contract value, KeyBanc believes that Oracle lacks nearly enough resources to build the necessary infrastructure. At the end of August, the company had $82.2 billion in long-term debt on its balance sheet. Additionally, it issued $18 billion in bonds in September to finance the expansion of its cloud computing capacity. Its cash position was approximately $10 billion, while another $9 billion in debt will mature within twelve months."

KeyBanc Capital Markets estimates Oracle will need approximately $100 billion over the next four years to build data centers and infrastructure for a large-scale cloud contract with OpenAI. OpenAI signed a five-year, $300 billion computing-power contract with Oracle requiring 4.5 gigawatts of capacity. Oracle reported total contract commitments rose 359 percent to $455 billion and saw a stock-price surge. Oracle carried $82.2 billion in long-term debt, issued $18 billion in bonds, held about $10 billion cash, and faced $9 billion of near-term maturities. Capital expenditures jumped to $8.5 billion in fiscal Q1 2026, sharply reducing free cash flow and prompting credit-rating concerns.

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