Oracle Corporation is facing a proposed class action lawsuit from bondholders who claim they suffered losses due to the company’s failure to disclose plans for additional debt. The suit, filed in a New York state court in Manhattan, represents investors who purchased $18 billion of notes and bonds issued in September, shortly after Oracle announced a five-year contract to supply Microsoft-backed OpenAI in a $300 billion deal.
Bondholders allege they were not informed when Oracle returned to the capital markets seven weeks later, seeking $38 billion in loans to support its AI infrastructure expansion. “The bond market’s reaction to Oracle’s additional debt was swift and bracing,” the investors said. Founder Larry Ellison and Oracle’s banking partners are also named as defendants in the lawsuit.
Oracle, incorporated in 1977, provides enterprise IT solutions, including Oracle Cloud SaaS, cloud-based industry solutions, licenses, and license support services. Despite the litigation, financial analysts remain positive about the company’s performance. KeyBanc Capital Markets recently reaffirmed an ‘Overweight’ rating with a $300 target, noting that “either one or both [segments] are being undervalued,” concluding that “Oracle’s stock overall remains attractive.” The lawsuit highlights investor concerns around transparency in funding AI initiatives while Oracle continues to expand its AI infrastructure in collaboration with OpenAI.
