Investment firm BMO believes that tech giant Oracle (ORCL) will likely need to raise new capital in either Fiscal Year 2026 or 2027 due to its rising capital expenditures. Indeed, five-star analyst Keith Bachman explained that Oracle’s growing investments, combined with its ongoing dividends and stock buybacks, could push the company to look for outside funding. While he thinks the situation is manageable, Bachman noted that issuing new capital might slightly hurt Oracle’s earnings per share.
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Bachman, who has an Outperform rating and a $245 price target on the stock, says that Oracle’s free cash flow could turn negative by $1 billion in Fiscal 2026 before recovering to just $100 million in Fiscal 2027. It is worth noting that both figures fall below Wall Street’s consensus. Despite this, Oracle is expected to continue investing in AI growth and maintain its shareholder return programs. With debt maturities of $4.6 billion in 2026 and $5.2 billion in 2027, the company might need to raise up to $20 billion over two years.
If Oracle raises $10 billion in each of those years, the cost of borrowing could be about 5%, given its BBB credit rating. Bachman estimates that this would result in roughly $270 million in interest expense in 2026 and $220 million in 2027. That would translate to an earnings per share impact of about $0.14 each year if assuming that the borrowing costs will be similar to its older debt, which may be optimistic considering its weakened credit profile.
Is Oracle a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ORCL stock based on 20 Buys, 11 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ORCL price target of $216.65 per share implies 4% downside risk.
