Oracle forecasts a fiscal 2028 cash-flow turnaround as AI spending climbs

Oracle has set a deadline for its AI buildout to start generating cash rather than consuming it. At its October 28 investor day, the company forecast positive free cash flow in the second half of fiscal 2028 and more than $30 billion the following year—even as analysts expect another steep increase in capital spending.

The announcement paired those milestones with a financing limit: Oracle said it would raise no more than $20 billion in additional funding across fiscal 2027 through fiscal 2030, split equally between equity and debt. Shares jumped 11% on Wednesday after the outlook, CNBC reported.

That rally followed a difficult stretch. Before Wednesday, Oracle had lost about one-third of its market value this year amid concerns that higher interest rates and its debt burden would make the AI expansion too expensive. The company has issued $117 billion in long-term debt and holds an S&P credit rating of BBB-, the lowest investment-grade level.

The spending peak comes before the cash recovery

Oracle's capital expenditures more than doubled to $55.7 billion in fiscal 2026. FactSet estimates cited by CNBC put this fiscal year's spending at $91.9 billion, a further 65% increase. Analysts also expect negative free cash flow of about $35 billion this fiscal year and a similar shortfall next year.

The spending supports Oracle's push beyond enterprise software into AI infrastructure, competing with Google and Amazon while supplying capacity to OpenAI. Revenue from that buildout needs to cover the rising costs. The cash-flow forecast therefore depends on more than continued sales growth: Oracle also expects the capital bill to ease.

CFO Hilary Maxson said capital spending should fall enough for cash generation to recover, according to Finimize's account of Reuters reporting. Oracle expects the business to begin funding its own growth in fiscal 2029. Those are company expectations, not results already achieved.

Oracle's cash-generation milestones

1. Second half of fiscal 2028Positive free cash flow

   Oracle's forecast places the return to positive cash generation in this period.

2. Fiscal 2029More than $30 billion

   The company targets a full-year cash surplus above $30 billion.

Customers and suppliers help bridge the gap

Oracle's financing plan is not limited to selling shares and issuing debt. In a securities filing cited by CNBC, the company identified three arrangements it expects to reduce upfront cash requirements during the transition:

• Vendor financing.
• Hardware supplied by customers.
• Customer prepayments.

The stated purpose is to lower the cash Oracle must supply upfront while it is still spending more than it generates. These arrangements sit alongside the $20 billion funding commitment; they are part of how Oracle expects to finance the transition, rather than evidence that the cash-flow turnaround has arrived.

The growth targets extend to fiscal 2030

Oracle forecast fiscal 2030 revenue of $225 billion, implying average annual growth of 35%. That sales figure was close to the $224.2 billion analysts polled by LSEG already expected. The company also set an adjusted operating-margin target above 40% and adjusted earnings of more than $21 per share for that year.

For fiscal 2027, Oracle reaffirmed targets of more than $90 billion in revenue and $8.10 in adjusted earnings per share. The investor-day outlook thus combined unchanged nearer-term goals with a longer timetable for turning the infrastructure expansion into positive cash flow.