Oracle (ORCL) is in talks with Apollo (APO) and Goldman Sachs (GS) to finance a large purchase of AI chips. The likely structure: investors fund a separate company that buys the chips and leases them to Oracle over time.
No amount was reported, and Oracle is still talking to other partners. For scale, the WSJ noted that Nvidia chips for a single 1-gigawatt data center cost tens of billions of dollars.
Why Oracle Wants the Debt Somewhere Else
Oracle’s total debt has climbed from $99.5 billion in November 2024 to $169.1 billion in August 2026, against $37.1 billion in cash and short-term investments.
That growth has already caused trouble. Bondholders sued in January, alleging Oracle understated how much more it would need to borrow when it sold $18 billion of bonds in September 2025. A lease structure lets Oracle add chips without adding bonds.
Oracle’s Capex Has Outrun Its Cash Flow
Capital expenditure hit $28.5 billion in the quarter ended August 31, up from $8.5 billion a year earlier. Over the last four quarters, Oracle spent $75.7 billion on capex and burned $28.7 billion in free cash flow.
Operating cash flow is rising, to about $23 billion last quarter, but it still can’t cover the buildout on its own.
The Leverage Ratio Tells a Different Story
Here’s the twist: Oracle’s leverage has improved on one measure. Total debt to EBITDA fell to 3.78x in August, from a peak of 4.70x in February. But the lower ratio does not eliminate its funding gap.
So this isn’t a rescue. Leasing could reduce Oracle’s need for upfront borrowing, but its effect on debt to EBITDA would depend on the lease classification and how the ratio treats lease obligations.
What to Watch for ORCL Stock
The same WSJ report described three proposed financing approaches: SpaceX (SPCX) seeking direct borrowing, Broadcom (AVGO) arranging financing for OpenAI, and Oracle exploring chip leasing.
My view: renting could make sense for a company with $169 billion of debt and negative free cash flow. It spreads payments over time, but does not necessarily keep the obligations off Oracle’s balance sheet. The details to watch are the deal’s size and whether the lease terms align with the reported $300 billion OpenAI contract, described as lasting roughly five years starting in 2027.
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