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Oracle ( ORCL -0.55% ) reports its fiscal first-quarter results on Thursday, Sept. 10, after the market closes. The tech company's shares have rallied into the report, climbing more than 10% over the past week to around $162 as of this writing. Even after that run, the stock would have to more than double to get back to its record high of $345.72. Most of the attention Thursday will likely go to revenue and the company's artificial intelligence (AI) contracts. The plan for fiscal 2027 calls for Oracle to spend about $70 billion in cash on capital expenditures. The business produced about $32 billion of cash in all of fiscal 2026.
On Oracle's June earnings call, chief financial officer Hilary Maxson laid out the spending plan. Oracle expects a net cash outlay of around $70 billion for capital expenditures in fiscal 2027, which runs through next May. Customer prepayments and timing effects should add another $20 billion to $25 billion on top, so the capital expenditures Oracle reports could reach $90 billion to $95 billion. The $70 billion is the cash Oracle itself expects to pay out.
Operating cash flow climbed 54% in fiscal 2026, which ended this past May, to a record $32 billion. Growth like that is impressive. However, Oracle spent $55.7 billion on capital expenditures in fiscal 2026, up 162% from the $21.2 billion it spent in fiscal 2025, resulting in a free cash flow of negative $23.7 billion. The fiscal 2027 plan steps the spending up again. The mismatch between the $70 billion forward guide for fiscal 2027 and the $32 billion cash produced in fiscal 2026 is notable. Even if operating cash flow grew another 54% this year, it would still be around $49 billion, which is well short of the capital budget.
Oracle plans to spend more than twice the cash its business produced last year. The company expects to raise around $40 billion of debt and equity in fiscal 2027. This includes an at-the-market program allowing Oracle to sell up to $20 billion of new stock over time. The $40 billion would be new money, on top of what Oracle has already borrowed. The company issued $43 billion of senior notes in fiscal 2026, and as of May 31, it hadn't sold any shares under the new stock program.
The financing section covers how much the company borrowed during the quarter and any stock sold under the new program. Operating cash flow is the line that could help close the gap. The concern here is not demand but funding. A company planning to spend twice the cash its business produces is making a significant bet, particularly if the AI build-out pays off on schedule. Borrowed money and new shares can support the plan temporarily, but eventually, the business itself must generate the cash. Until operating cash flow starts to close the gap, it is advisable to stay on the sidelines.
Source: The Motley Fool
