Oracle (ORCL) Stock; Slides 4% as Bondholders Sue Over Undisclosed AI Debt Plans

TLDRs;

• Oracle shares fell as bondholders sued, alleging the company concealed plans for rapid additional borrowing to fund AI infrastructure.
• Investors say a $38 billion loan raise soon after a $18 billion bond sale should have been clearly disclosed upfront.
• Concerns deepened after Blue Owl exited a Michigan data center project, citing deal terms and political uncertainty.
• The case highlights rising scrutiny on how aggressively big tech firms are leveraging balance sheets to compete in AI.

Oracle shares slid about 4% after bondholders filed a lawsuit accusing the company of failing to properly disclose its true funding needs for a massive artificial intelligence infrastructure push tied to its partnership with OpenAI.

The legal action, combined with fresh concerns over data center financing in Michigan, has raised investor anxiety about how aggressively the software giant is leveraging its balance sheet to compete in the global AI race.

Oracle Corporation, ORCL

Lawsuit Targets AI Funding Disclosures

The complaint, lodged in a New York state court, represents investors who purchased roughly $18 billion worth of Oracle notes and bonds in September 2025. According to the plaintiffs, the company’s offering documents suggested that Oracle might need to borrow more in the future, when in fact management had already decided to pursue substantial additional financing for AI-focused data centers.

Just seven weeks after the bond sale, Oracle returned to the capital markets to secure about $38 billion in loans. The funds were earmarked to support large-scale computing facilities linked to its strategic deal with OpenAI, which requires enormous and continuous investment in power, cooling, and advanced chips.

Bondholders argue that if they had known another major debt raise was imminent, they would have demanded higher yields or reconsidered their purchases altogether.

Surprise Return to Capital Markets

At the heart of the case is the timing. Investors say the rapid follow-on borrowing caught them off guard, undermining confidence in Oracle’s transparency. The lawsuit claims that language stating the company “may” need more debt was misleading because the decision to raise additional funds had already been made internally.

Oracle has not yet responded in detail to the allegations, but the case highlights the growing scrutiny faced by large technology firms as they pour tens of billions of dollars into AI infrastructure. For bond investors, the concern is not only about disclosure, but also about how much leverage Oracle is willing to assume as competition with hyperscalers and cloud rivals intensifies.

Michigan Data Center Uncertainty

Adding to the pressure on the stock, Oracle shares also fell after reports that Blue Owl Capital, a frequent partner in its data center developments, decided not to provide equity for a major facility planned in Michigan. Blackstone is now in talks to step in, while Bank of America is leading a $14 billion debt package for the project.

Oracle itself is not the direct borrower in this structure. Instead, it typically commits to long-term leases, allowing third parties to finance construction with a mix of equity and loans. This model has already been used for large projects in Wisconsin, Texas, and New Mexico, helping Oracle scale quickly without owning the facilities outright.

However, Blue Owl’s exit reportedly stemmed from concerns over deal terms and political risk. Lawmakers in Michigan are debating whether to roll back data center tax incentives, creating uncertainty around the project’s long-term economics. Although Governor Gretchen Whitmer has publicly backed the $7 billion development in Saline Township, similar proposals elsewhere in the state have faced local opposition.

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