Oracle (ORCL) is a provider of cloud-based solutions that touch database and middleware software, cloud infrastructure, infrastructure as a service, and software as a service.
Oracle’s stock is up 41% YTD after rallying close to 90% in the last 3 months. The stock easily outperforms the benchmark S&P 500 Index ($SPX), which has gained just under 6% YTD. Oracle’s stock is also up 62% in the 52-week timeframe while trading at its all-time high.
Barclays analyst Keith Bachman has issued a note to clients warning of Oracle’s limited liquidity. The analyst has assigned a “Outperform” rating to the tech giant, with a price target of $245, indicating upside of 5% from the current market level.
Despite his rating and price target, Bachman is concerned about Oracle’s future capital needs. The analyst pointed toward the company’s increased expenditure pattern, as well as the cash it needs for dividends and planned share buybacks. He believes that Oracle might need to raise capital in the following years, most likely its fiscal 2026 or 2027.
Bachman anticipates Oracle to further boost its artificial intelligence (AI) expenditure, which, coupled with its high-value debt maturity, indicates the company’s need for close to $20 billion over the next two years.
The analyst warns that despite the situation being manageable at present, several capital-raising events might hamper its earnings. Bachman anticipates Oracle’s free cash flow could turn a negative $1 billion in FY26 and $100 million in FY27, far below consensus estimates of $213 billion and $1.957 billion, respectively.
Bachman says that the company might look to raise $10 billion in FY26 and another $10 billion in FY27. This translates to a cost of $0.14 per share.
Oracle’s latest financial report came on June 11, when the company posted its fiscal fourth-quarter results showing a profit of $3.43 billion or $1.70 per adjusted share. The figure surpassed analysts’ $1.64 per share estimate. Revenue for the quarter came to $15.9 billion again beating Wall Street’s $15.54 billion estimate.
The company’s cloud services and license support segment contributed $11.7 billion, up 14%, while cloud infrastructure (OCI) revenue surged 52% to $3 billion, reflecting heightened demand for AI and multicloud solutions.
