Oracle Surges 11% After Promising Big Growth and Capping Its Borrowing

Keypoints:

• Oracle shares jumped about 11% on Wednesday after its Investor Day
• The company targets at least $225 billion in revenue by fiscal 2030
• It will limit new outside funding to $20 billion through fiscal 2030
• Free cash flow is expected to turn positive in the second half of fiscal 2028
• Capital spending is expected to peak in fiscal 2027 and 2028

Oracle gave investors something they were hungry for on Wednesday, a plan with limits. The company held its Investor Day and shares jumped about 11%, closing at $144.54.

The headline number is big. Oracle expects at least $225 billion in revenue by fiscal 2030, which would mean growth of about 35% a year on average. For its current fiscal year, it expects at least $90 billion, up from a record $67.4 billion last year. It also aims for operating margins above 40% by fiscal 2030.

But the real star of the show was the cap. Oracle said it will raise no more than $20 billion in new money from capital markets through fiscal 2030. It has already finished a $20 billion share sale program in the first quarter of the current fiscal year. Investors had been worried that Oracle's huge AI data center plans would force it to keep borrowing and issuing stock, so a firm ceiling calmed those nerves.

The company also showed when the spending should ease. It expects capital spending to peak in fiscal 2027 and 2028, and then fall in fiscal 2029. For context, FactSet estimates its spending more than doubled to $55.7 billion last year and will rise to about $91.9 billion this year. Free cash flow, the money left after spending, is expected to turn positive in the second half of fiscal 2028 and reach at least $30 billion in fiscal 2029.

That cash flow forecast matters. Oracle has been one of the most debt worried names in the AI trade, with the cost of insuring its debt staying high. A path to paying for its own growth changes the story from a company that spends a lot to a company that could earn a lot.

The day also had product news. At its Oracle AI World event, the company showed new AI tools and partnerships, including work with OpenAI and Nvidia. It is not a guarantee. These are targets, not results, and they depend on AI demand staying strong. But on Wednesday, investors liked having numbers to hold on to.