Most of us never see Oracle’s name, even when we use it. It sits behind airline bookings, hospital records, and payroll systems, quietly keeping the data straight.
That kind of business usually throws off steady cash. For years, Oracle’s did.
I’m clearly not alone in depending on it. Oracle (ORCL) generated $67.4 billion in revenue in fiscal 2026, according to Bank of America’s model, and it holds $664 billion in signed contracts it hasn’t billed yet, 24/7 Wall St. reported.
“We think that what we’re building here is going to create fantastic returns for all of our investors,” said Co-CEO Mike Sicilia at the company’s investor day on Oct. 28.
However, a subtle shift has emerged in how investors see the bill for that buildout.
According to a Bank of America research report seen by TheStreet, Oracle’s funding needs are far smaller than Wall Street feared, which could take the biggest worry off the stock.
Oracle’s $20 billion promise cuts the funding fear
At its investor day, Oracle said it needs just $20 billion more to finish its current data center buildout.
“We’re announcing that this $20 billion, split evenly between debt and equity, is the final amount needed,” said Chief Financial Officer Hilary Maxson.
That means $10 billion of new stock and $10 billion of new debt. It comes on top of a $20 billion stock sale Oracle already completed in its first fiscal quarter, 24/7 Wall St. reported.
The stock jumped 10.7% to $144.54 on Oct. 28. Even after that, it sat about 49% below its 52-week high of $285.46.
Read more: Oracle’s ‘force majeure’ warning lands as AI power gets scarce
Analyst Tal Liani laid out why in a note titled “Analyst day highlights: Focus on funding clarity and growth acceleration.”
“Management plans to add 7GW of data center capacity over the next three years across 38 projects, requiring $10bn of equity and 10bn of debt funding, well below Street’s ~50bn estimate,” wrote Liani.
By my math, that’s about $30 billion, or 60%, less outside money than Wall Street had penciled in.
Liani credited “alternative financing, including customer prepayments, vendor financing, and bring-your-own-hardware arrangements.” In other words, customers pay upfront, suppliers extend credit, and some clients bring their own chips.
Maxson made the same point. “Customers are willing to make prepayments to preserve the right to receive services from Oracle in the future,” she said.
The debt load still matters
Oracle isn’t starting from a clean balance sheet.
The company had $125.3 billion in borrowings against $36.4 billion in cash, 24/7 Wall St. reported. Free cash flow was negative $23.7 billion in fiscal 2026 as it spent $55.7 billion on capital projects.
S&P Global cut Oracle’s credit rating to BBB- in July, the lowest investment-grade rung, PPC Land reported. “We underestimated the scale of the investments required to expand the AI business,” S&P wrote.
One more cut from S&P would push Oracle’s rating into junk territory. That would raise its borrowing costs on every future dollar.
More Oracle and AI spending:
- Oracle’s massive expansion plans face a daunting reality
- CoreWeave, Oracle have an interest rate problem
- Oracle’s $664 billion backlog sends a signal to Dell, HPE
Maxson said keeping the rating is the top priority. “First and foremost is to maintain investment-grade credit ratings,” she said.
Given that backdrop, it’s easy to understand why Liani sees a smaller raise as the key takeaway. Evercore ISI had estimated Oracle would need $50 billion to $60 billion more before cash flow turned positive, TheStreet reported.
For existing shareholders, the new stock sale is modest. By my math, $10 billion of new shares at $144.54 works out to roughly 69 million shares, or about 2.3% of the roughly 3 billion shares outstanding.
Bank of America’s call on Oracle’s cash comeback
The bigger promise is cash.
Oracle “expects to return to positive FCF [free cash flow] in FY2H28 [the second half of fiscal 2028] and generate 30bn+ in FY29, versus Street estimates of -1bn,” wrote Liani.
That would be a sharp turn. BofA models free cash flow of negative $30.4 billion in fiscal 2027 and negative $14.4 billion in fiscal 2028, before a positive $30.2 billion in fiscal 2029.
By my math, that’s about $45 billion of cash burned over the next two fiscal years before the payoff arrives. The $20 billion raise and Oracle’s existing cash have to bridge that gap.
Oracle also kept its fiscal 2030 targets of $225 billion in revenue and at least $21 in adjusted earnings per share. At $144.54, the stock trades at about 7 times that 2030 earnings target, by my math.
The data center math looks solid on paper. Maxson said “operating margin at the project level is around 34%,” and Liani noted a 28% return on investment over the life of the infrastructure.
Much will likely depend, however, on whether those customer prepayments keep coming. If a big AI customer slows its spending, Oracle could be back in the debt market sooner than planned.
I’d also note that “final” funding promises have a way of being revised when projects run late.
Still, Bank of America kept its Buy rating and $240 price objective, about 66% above where the stock closed on Oct. 28.
“We update our estimates to reflect the new disclosures and continue to view Oracle as a premier growth acceleration story,” wrote Liani.
Related: Oracle has a spending question its new chip deals can’t answer