oracle Shares soared 12% on Wednesday after the software company announced fiscal 2030 revenue projections of $225 billion, implying a compound annual growth rate of 35%, and would limit additional funding in that range to $20 billion.
Oracle said in an investor briefing that the proceeds will be split evenly between equity and debt as part of its 2027 to 2030 funding plan.
“Vendor financing, customer-provided hardware, and customer prepayments are expected to result in positive free cash flow, reducing prepayment cash requirements,” Oracle said in a filing with the Securities and Exchange Commission.
Analysts compiled by LSEG expect sales growth to be 8% in fiscal 2027, with significant acceleration in the following two years. They forecast fiscal year 2030 revenue of $224.2 billion.
By Wednesday, Oracle had lost about a third of its value this year amid concerns that rising interest rates and the company’s high debt burden would make building artificial intelligence too costly. Oracle has $117 billion in long-term debt outstanding and is sticking to a BBB- credit rating, the lowest investment-grade rating above junk, according to S&P.
Oracle, long known as an enterprise software giant, entered the AI infrastructure game in a big way last year to compete with hyperscalers such as: google and Amazon While providing capacity to OpenAI. The company’s capital spending is expected to more than double to $55.7 billion in fiscal 2026, and jump another 65% to $91.9 billion this fiscal year, according to FactSet.
Oracle needs to grow its revenue to cover rising costs. The company forecast that its operating profit margin for fiscal 2030 will exceed 40%.
Oracle also said it will turn free cash flow positive in the second half of fiscal 2028, and that free cash flow will reach more than $30 billion next year. Analysts expect free cash flow to be negative $35 billion for the current fiscal year, and a similar number for next year, according to FactSet.
Spreads on Oracle’s five-year credit default swaps (default insurance) currently sit at 277 basis points after reaching about 320 basis points earlier this month. This year it has increased by almost 100%.
—CNBC’s Michelle Fox and Jordan Nove contributed to this report.
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