Oracle shares jumped 12% on Wednesday after the software company issued a revenue forecast of $225 billion for fiscal 2030, implying average annual growth of 35%, and said it would limit additional fundraising over that period to $20 billion.
At its investor day, Oracle said that under its financing plan for fiscal years 2027 to 2030, the amount raised will be split equally between equity and debt.
“Supplier financing, customer-furnished hardware and customer prepayments are expected to reduce upfront cash requirements through the transition to positive free cash flow,” Oracle said in a filing with the Securities and Exchange Commission.
Analysts surveyed by LSEG expect revenue growth of 8% in fiscal 2027, followed by a significant acceleration over the next two years. They forecast fiscal 2030 revenue of $224.2 billion.
Before Wednesday, Oracle had lost about a third of its value this year on concerns that rising interest rates and the company’s heavy debt load would make it too costly to develop its artificial intelligence. Oracle has issued $117 billion in long-term debt and clings to an investment-grade credit rating of BBB-, the lowest level of investment grade above junk, according to S&P.
Long known as an enterprise software giant, Oracle jumped into the AI infrastructure game in a major way last year in an attempt to compete with hyperscalers like Google And Amazon while providing capacity to OpenAI. Its capital spending more than doubled to $55.7 billion in fiscal 2026 and is expected to rise another 65% this fiscal year to $91.9 billion, according to FactSet.
Oracle needs an increase in revenue from its build to cover soaring costs. The company said its operating margin for fiscal 2030 would exceed 40%.
Oracle also said it would turn free cash flow positive in the second half of fiscal 2028 and reach more than $30 billion in free cash flow the following year. Analysts expect negative free cash flow of $35 billion this fiscal year and a similar figure next year, according to FactSet.
The spread on Oracle’s five-year credit default swaps, which provide insurance against default, currently stands at 277 basis points after reaching around 320 basis points earlier this month. That’s an increase of almost 100% this year.
— CNBC’s Michelle Fox and Jordan Novet contributed to this report.
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