Oracle has entered into preliminary discussions for a $38 billion loan that would finance the construction of new data‑center sites for OpenAI. The financing, arranged with a consortium of banks, is intended to support Oracle’s aggressive expansion of its Gen 2 cloud architecture and AI database offerings, positioning the company as a key infrastructure partner for the rapidly growing generative‑AI market.
Oracle’s strategy has increasingly focused on high‑performance AI workloads. The loan would enable Oracle to build and operate new data‑center campuses that will host OpenAI’s “Project Stargate,” a $300 billion five‑year commitment to purchase computing power from Oracle. The partnership aligns with Oracle’s recent record sales contracts, which exceeded $48 billion in Q3 FY2025, and underscores the company’s intent to capture a larger share of the AI‑infrastructure race against Amazon, Microsoft, and Google.
Financially, the $38 billion loan would raise Oracle’s long‑term debt by a substantial margin. Current debt‑to‑EBITDA ratios sit between 3.8× and 4.6×, while interest coverage hovers around 4.9× to 5.1×. Adding the new debt would push these leverage metrics higher, increasing refinancing risk and interest expense, but it would also fund capital expenditures that have already reached $21.2 billion last year and are projected at $25 billion for the current fiscal year. Oracle’s management has indicated that the loan will be fully amortized over a multi‑year period with market‑aligned rates.
Safra Catz, Oracle’s CEO, emphasized that the company’s AI infrastructure demand “substantially exceeds supply.” She noted that the partnership with OpenAI is a strategic move to accelerate OCI’s growth and to secure long‑term revenue streams from one of the world’s largest AI developers. Oracle’s CFO highlighted that the loan will support the company’s focus on cost discipline while investing in high‑return verticals, signaling confidence in maintaining profitability amid the increased leverage.
In the broader competitive landscape, Oracle’s move places it in direct contention with Amazon Web Services, Microsoft Azure, and Google Cloud, all of which are investing heavily in AI‑specific data‑center capacity. By securing this loan, Oracle aims to differentiate its Gen 2 architecture, which offers lower latency and higher throughput for large‑scale AI models, potentially attracting more enterprise customers seeking specialized AI services. The partnership also signals to the market that Oracle is committed to becoming a primary infrastructure provider for the next generation of AI workloads.
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