Why Oracle Stock Is Down Today
Oracle Corporation(NYSE:ORCL) stock is down 6.9% as of 12:52 p.m. ET on Monday, Nov. 2, after the company said it has filed to raise $20 billion by selling a combo of new shares and bonds.
The S&P 500 and the Nasdaq Compositeare up 0.2% and 0.1%, respectively.
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How Oracle's $20 billion stock and debt raise breaks down
Oracle will split the raise in two: $10 billion of new common stock and $10 billion of senior notes. Oracle says the cash is meant for capital spending as well as paying down other debts and "future investments or acquisitions."
While the stock is getting hit today, this isn't a shock. Just last week, Oracle said it would raise additional funding for its AI build-out -- no more than $20 billion through fiscal 2030. Still, it seems investors are still unsure about the additional raise.
Image source: Getty Images.
Why I'm not sold on Oracle's AI spending limit
If Oracle can limit itself to this raise for the next few years, it would help calm fears over the sustainability of its substantial AI bets . I'm not entirely convinced it will, and I fear capital spending could expand while, at the same time, revenues are delayed as data center projects hit snags in construction and political opposition.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy .
Why Oracle Stock Is Down Today was originally published by The Motley Fool
