Oracle Just Capped How Much New Money It Will Raise. I’d Consider Buying a Small Stake in the Stock.

Oracle (ORCL -3.45%) used its investor day on Wednesday, Oct. 28, to repeat a goal investors had heard before. The plan still calls for revenue of $225 billion or more in fiscal 2030 and at least $21 a share in non-GAAP (adjusted) earnings. Management first set out the targets at its financial analyst meeting in October 2025.

The stock dropped about 7% the day after the first presentation, and it kept falling. As I write, shares trade near $145, down about 56% from the $328.33 record close they set in September 2025.

This time, shares jumped about 11% on the day. What was new on Wednesday was a second promise — a limit on how much more money Oracle will raise from investors and lenders. To me, the limit matters more to shareholders than the revenue target does.

Image source: The Motley Fool.

Four years, $40 billion

Oracle pledged to raise at most $20 billion in extra funding in the capital markets during its fiscal 2027-to-2030 investment cycle (its fiscal years end May 31). Management expects it to be $10 billion in stock and $10 billion in gross debt, and the limit doesn’t include refinancing existing debt.

The cap comes on top of the $20 billion in stock Oracle already sold through an at-the-market program during its fiscal first quarter, which ended Aug. 31.

Showing how much the funding pace is set to slow, that puts the full four-year cycle at around $40 billion in new stock and debt. In June, Oracle expected to raise about that much in fiscal 2027 alone. And in fiscal 2026, it raised $43 billion in debt and $5 billion in equity — $48 billion in one year.

Management also put dates on the payoff. Capital spending should peak in fiscal 2027 and 2028 before easing. Free cash flow should turn positive in the second half of fiscal 2028 and hit $30 billion or more in fiscal 2029, when Oracle expects growth to be self-funded.

This would reverse a sharp drop. Oracle’s free cash flow was near breakeven in fiscal 2025, and fiscal 2026 finished at negative $23.7 billion. The first quarter of fiscal 2027 added around $5 billion more in negative free cash flow.

Dilution and debt get a ceiling

The revenue goal didn’t shift. But how much of that future profit goes to new shareholders and lenders did.

The stock half of the cap is small next to Oracle’s recent sales. At about $145 a share, $10 billion in new stock comes to about 69 million shares — roughly 2% of the 3.02 billion Oracle had outstanding in early September. The at-the-market program alone added about 141 million shares last quarter.

Another $10 billion of gross debt is also modest next to the $125 billion of notes and other borrowings Oracle had at the end of August. And management expects net debt to be below 3.5 times adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in fiscal 2029.

Both limits bear on that $21 target, as new shares divide the profit further and new debt adds interest costs. When Oracle first set the goal, shares closed at $313, around 15 times its fiscal 2030 earnings target. Today they trade at about seven times those targeted earnings.

Some of that gap arguably reflected worry over how many more shares and how much more debt the plan might need before the profits showed up.

ORCL – Oracle

$139.56-$4.98 (-3.45%)

NYSE · As of 4:00 PM ET 10/29/26

Is the stock worth buying now?

Of course, the cap doesn’t cover everything. It applies to the capital markets, and Oracle expects vendor financing, customer-provided hardware, and customer prepayments to carry some of the load. It also had $288 billion in data center lease commitments at the end of August that hadn’t started yet.

But Oracle’s leverage target treats vendor financing and lease liabilities as debt, so those obligations fall inside that 3.5-times-EBITDA goal.

Shareholders also shouldn’t rely on buybacks to lower the share count. Oracle spent just $95 million repurchasing stock in fiscal 2026 and zero in fiscal Q1, and its stated priorities don’t include buybacks.

In the end, the cap doesn’t make Oracle’s build-out any cheaper. But it does limit how many more shares and how much more debt stand between today’s shareholders and that $21 target. Against the $8.10 a share in adjusted earnings management expects this fiscal year, Oracle trades at around 18 times earnings, which I see as a fair price for that plan. I’d consider buying a small stake here, and I’d add more only after capital spending starts to fall.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.