Lawsuit Alleges Oracle Made Misleading Statements Around Debt Sale for AI Infrastructure

Oracle was reportedly sued Wednesday (Jan. 14) by bondholders who allege that the company made false and misleading statements in the offering documents for an $18 billion debt sale.

The proposed class action lawsuit includes investors who bought $18 billion of notes and bonds issued by Oracle on Sept. 25, after the company announced two weeks earlier that it had gained a $300 billion, five-year contract to supply computing power to OpenAI, Reuters reported Wednesday.

The lawsuit alleges that the investors then suffered losses when Oracle returned to the capital markets seven weeks later, seeking $38 billion of loans to fund data centers to support that agreement, and prices fell and yields rose as investors perceived higher credit risk, according to the report.

The suit seeks unspecified damages, per the report.

Reached by PYMNTS, Oracle declined to comment on the report.

It was reported in September that Oracle’s $300 billion agreement to provide cloud services to OpenAI was one of the largest technology contracts on record.

The five-year deal secures vast amounts of computing power and requires 4.5 billion gigawatts of electricity, roughly equal to what 4 million U.S. homes consume, the Wall Street Journal reported at the time.

PYMNTS reported that for Oracle, the deal strengthened its standing in a competitive cloud market and, by tying the company to one of the most visible providers of artificial intelligence, positioned it as a central player in a fast-growing segment.

Later in September, PYMNTS reported that OpenAI and Oracle’s contract was the most visible example of how the AI boom’s second act is being financed not just by venture dollars but also by borrowing, as companies race to build the data centers and buy the chips needed to train and run large language models.

Oracle said in a December blog post that it was building a new data center in Michigan that will be equipped with the latest technology for its client, OpenAI.

The company said that this is one of 64 data centers that Oracle is building, and that these will join the 147 such facilities that the company already operates around that world.