Lending money to one of the biggest builders of artificial intelligence data centers now pays almost as much as owning stocks have paid over the long run.

Larry Ellison's Oracle has never been more ambitious in its AI buildout. That has a price to pay and its lenders have rarely asked for more in return.

Oracle Corp. (NYSE:ORCL) 6.55% bonds due February 2046 are trading at 84.91 cents on the dollar.

At that price, the bond's yield to maturity is 8.11%.

Yield to maturity is the yearly return a buyer locks in by holding the bond until it is repaid. It assumes every coupon gets reinvested at the same rate.

Every Oracle bond due after 2044 now yields between 7.85% and 8.44%, data from Public.com shows.

What $10,000 In Oracle Debt Buys

At 84.91 cents on the dollar, $10,000 buys about $11,780 of face value.

That pays roughly $770 a year in coupons, which works out to a 7.7% current yield.

Held until February 2046, the bond pays about $15,000 in interest plus $11,780 in principal. That comes to roughly $26,800 before any reinvestment.

If every coupon is reinvested at 8.1%, the $10,000 grows to about $46,500 in a little over 19 years.

All of this depends on one condition. Oracle has to stay solvent and keep paying.

Treasuries show how much extra risk the market is pricing in. The 20-year Treasury yielded 5.64% on Oct. 1, according to the U.S. Treasury. The 10-year was at 5.24.

As a result, Oracle pays about 247 basis points more than Washington to borrow for two decades.

The rating agencies still treat Oracle's debt as investment grade. S&P Global rates Oracle BBB-, the last rung before junk. Moody's has it at Baa2 and Fitch at BBB.

Why Oracle Bondholders Are Asking For More

The answer is in the cash flow statement.

Oracle's capital expenditures are the money it spends on data centers, chips and power. Last quarter, they amounted to roughly 191% of revenue. That spending was up 235% from a year earlier.

Free cash flow is the cash left over after that spending. It came in at negative $5.4 billion in the fiscal first quarter, the fifth straight quarter below zero.

On its September earnings call, management guided fiscal 2027 capital spending to $90 billion to $95 billion.

Once customer prepayments are counted, it said net cash spending should be no more than $70 billion.

In addition, Oracle expects to raise about $40 billion in debt and equity.

That includes $20 billion of at-the-market share sales. These let a company sell new shares into the market gradually, which dilutes existing shareholders.

The payoff management points to is a $664 billion backlog of remaining performance obligations as of the fiscal first quarter. That is revenue already under contract but not yet recognized.

Hartnett Says 'Buy Humiliation'

Bank of America strategist Michael Hartnett sees the sell-off in bonds as an opening.

In his latest Flow Show note, he said global allocators are very long stocks and very short bonds, "so we say 'buy humiliation', start adding some bonds."

He added that "bond portfolios getting close to offering equity-like returns."

He pointed to U.S. investment-grade tech bonds. Their prices have fallen 9% over the past year, and their yields have risen from 4.5% to 6.2%.

Hartnett named Oracle at 8.4%, Meta Platforms Inc. (NASDAQ:META) at 7.5% and Alphabet Inc. (NASDAQ:GOOGL) at 6.9%.

"Since AI back-stopped by U.S. government, long-term hyperscaler bond yields… may soon tempt buyers," he said.

Can Oracle Stock Clear The 8.1% Bar?

Oracle shares closed at $138.07 on Thursday, and are down 27% year-to-date.

To match an 8.1% yearly return through February 2046, the stock would have to reach about $625, not counting dividends.

That is roughly 4.5 times today's price.

That is not impossible. However, it requires the AI buildout to pay off on schedule, the financing plan to hold, and the dilution to stay manageable.

The bondholder's return is written into a contract and capped. The shareholder's return depends on whatever Oracle earns after its lenders are paid.