Oracle sets $225 billion revenue target, caps new debt at $20 billion

Oracle shares rose 11% on Wednesday.

The surge followed the company's announcement of a long-term revenue goal of $225 billion for fiscal 2030. This target implies average annual growth of 35%. Management also stated that it would cap additional fundraising at $20 billion for the period between fiscal 2027 and 2030. The company said this new capital would be divided evenly between equity and debt.

In a filing with the Securities and Exchange Commission, Oracle noted that vendor financing, customer-provided hardware, and customer prepayments would lower upfront cash needs. The goal is to transition to positive free cash flow. Before Wednesday's rally, Oracle stock had dropped by roughly one-third this year. Investors expressed concern that rising interest rates and a large debt load would make the company's artificial intelligence expansion too costly. Oracle currently holds $117 billion in long-term debt. S&P rates this debt at BBB-, the lowest investment-grade tier and one step above junk status.

Oracle has shifted aggressively into AI infrastructure over the past year to compete with major cloud providers like Google and Amazon. The company also supplies capacity to OpenAI. According to FactSet, capital expenditures more than doubled to $55.7 billion in fiscal 2026. Spending is projected to increase by another 65% this fiscal year to reach $91.9 billion. To manage these rising costs, Oracle aims for an operating margin exceeding 40% by fiscal 2030.

The company outlined a specific path to cash flow positivity. Oracle expects to generate positive free cash flow in the second half of fiscal 2028. It projects generating more than $30 billion in free cash flow the following year. Analysts surveyed by LSEG had previously modeled fiscal 2030 revenue at $224.2 billion. They also expected 8% growth in fiscal 2027 before a sharp acceleration in the subsequent two years. FactSet data indicate analysts anticipate negative free cash flow of $35 billion for the current and next fiscal years.

Credit markets have reflected these concerns in recent months. The spread on Oracle's five-year credit default swaps stands at 277 basis points. These swaps act as insurance against default. The rate peaked at about 320 basis points earlier this month. It has increased by almost 100% over the last twelve months.