Oracle's stock climbed more than 11% on Wednesday after the company reaffirmed its fiscal 2027 guidance and unveiled long-term financial targets, giving investors a clearer picture of the expected payoff from its massive artificial intelligence infrastructure spending.
At its financial analyst day in Las Vegas, the cloud and database giant said it expects revenue of at least $90 billion and adjusted earnings of $8.10 per share for fiscal 2027. Analysts had penciled in earnings of $8.14 per share and revenue of $90.45 billion, according to FactSet.
Long-term revenue ambition
Oracle also outlined plans to expand revenue significantly over the next several years, projecting a compound annual growth rate of 35% between fiscal 2026 and fiscal 2030, with revenue reaching at least $225 billion in the final year. That figure came in above the $217.7 billion that Wall Street had expected.
For fiscal 2030, the company forecast adjusted operating margins above 40% and adjusted earnings of more than $21 per share. These targets reflect Oracle's push to move beyond its traditional database software business and become a leading provider of computing infrastructure for AI workloads.
The company is building data centers to serve OpenAI and other customers, placing it at the center of surging demand for AI computing capacity. However, the scale of this expansion has raised concerns about the costs involved and the time needed to generate sufficient cash returns. Oracle also faces scrutiny over its reliance on OpenAI, a loss-making customer, as it expands its infrastructure business.
Free cash flow turnaround
Chief Financial Officer Hilary Maxson said Oracle expects free cash flow to turn positive in the second half of fiscal 2028 and exceed $30 billion in fiscal 2029. That projection is more favorable than market expectations, as investors had anticipated free cash flow would remain negative in fiscal 2029, according to Bloomberg data.
Oracle expects capital spending to peak between fiscal 2027 and fiscal 2028 before slowing in fiscal 2029. The company said the reduction in spending would help it generate more cash internally. Maxson added that Oracle expects to begin self-funding its growth in fiscal 2029, potentially reducing its reliance on external financing as its AI infrastructure investments mature.
Financing strategy
Oracle also said it plans to raise $20 billion from capital markets between fiscal 2027 and fiscal 2030, excluding refinancing, with $10 billion in equity and $10 billion in debt. The company expects vendor financing, customer-provided hardware, and prepayments to reduce its upfront cash requirements.
These arrangements could help Oracle manage the funding demands of its data-center expansion while limiting additional capital raises. The company's ability to control financing needs and generate cash will remain important as it pursues its long-term revenue targets.
This article is for informational purposes only and does not constitute financial advice.
