Oracle expects free cash flow of at least $30 billion in fiscal 2029
At its investor day, Oracle set a target of expecting free cash flow of at least $30 billion in fiscal 2029, whereas investors had previously expected a negative figure. In fiscal 2026, the company consumed $23.7 billion in free cash flow to build AI data centers for customers including OpenAI, and this year it plans capital expenditure of $90 billion to $95 billion. CFO Hilary Maxson said free cash flow will turn positive in the second half of fiscal 2028, provided that capital expenditure peaks in fiscal 2027 and fiscal 2028 and then declines and new capacity begins generating revenue. Oracle also set a cap of $20 billion on new financing through fiscal 2030, split equally between equity and debt, after having completed a $20 billion stock offering. After the announcement, the stock rose as much as 9.6%, while the shares had fallen 33% year to date as of Tuesday.
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Oracle gave a fiscal 2029 free cash flow target and capital expenditure cadence, which readers can use to understand the payback path for AI data center investment.
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Oracle now targets at least $30B in free cash flow for fiscal 2029, when investors expected negative cash.
Oracle burned $23.7B of free cash flow in fiscal 2026 building AI data centers for OpenAI and others, and plans $90B to $95B of capex this year.
In September, CFO Hilary Maxson refused to say when that drain would end; At Investor Day today she put the turn in the second half of fiscal 2028.
The plan depends on capital spending peaking in fiscal 2027 and 2028, then stepping down as new capacity starts earning revenue.
Oracle also capped further capital raising through fiscal 2030 at $20B, split evenly between equity and gross debt, beyond a $20B share sale it already completed.
Customer prepayments, customer-supplied hardware and vendor financing are meant to cover much of the remaining upfront cost.
The shares jumped as much as 9.6% after falling 33% this year through Tuesday.