Evercore ISI analyst Kirk Materne sees two tech giants, Microsoft (MSFT) and Oracle (ORCL), benefiting from U.S. President Donald Trump’s newly signed “One Big Beautiful Bill” (OBBB). According to the five-star analyst, the new tax law could help software companies save billions in cash due to favorable changes in tax treatment for R&D and capital expenditures.
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“Based on our analysis, the companies that stand to benefit most are those with high R&D intensity and capex levels and that are currently paying meaningful cash taxes,” said Materne. He noted that the key changes in the bill include reinstatement of domestic R&D expense and return of 100% bonus depreciation for qualified capex from 2025 through 2029.
Billions in Cash Flow Gains
The analyst estimates that Microsoft could see an $11 billion boost in FCF, or $1.50 per share, while Oracle stands to gain $3.3 billion, or $1.12 per share. Materne expects MSFT to spend about $69.7 billion and ORCL around $23.6 billion on capital projects in 2025, mainly to expand their AI capabilities and build more data centers.
Also, he noted that the average benefit across software firms paying cash taxes is about 9%. Further, he said cash flow gains stem from tax accounting changes, not changes to financial accounting.
Moving ahead, the analyst expects the broader tech sector to ramp up AI investments as these tax incentives free up more cash.
Is ORCL a Good Buy Now?
Turning to Wall Street, ORCL stock has a Moderate Buy consensus rating based on 21 Buys and 11 Holds assigned in the last three months. The average Oracle stock price target of $220.11 implies about 7.25% downside from current levels.
Is Microsoft a Buy, Hold, or Sell?
Overall, MSFT stock has a Strong Buy consensus rating based on 30 Buys and four Holds assigned in the last three months. At $524.86, the average Microsoft price target implies a 5.98% upside potential.
