Oracle Reports Thursday. Its Capital Budget Is More Than Twice the Cash Its Business Produces.

Oracle (NYSE:ORCL) reports its fiscal first-quarter results on Thursday, Sept. 10, after the market closes. The tech company's shares have rallied into the report, climbing more than 10% over the past week to around $162 as of this writing. Even after that run, the stock would have to more than double to get back to its record high of $345.72.

Most of the attention Thursday will likely go to revenue and the company's artificial intelligence (AI) contracts. But the line I'll be reading first is capital expenditures -- and, right below it, how Oracle is paying for them.

The plan for fiscal 2027 calls for Oracle to spend about $70 billion in cash on capital expenditures. The business produced about $32 billion of cash in all of fiscal 2026.

Image source: Getty Images.

How big is the gap?

On Oracle's June earnings call, chief financial officer Hilary Maxson laid out the spending plan. Oracle expects a net cash outlay of around $70 billion for capital expenditures in fiscal 2027, which runs through next May. Customer prepayments and timing effects should add another $20 billion to $25 billion on top, so the capital expenditures Oracle reports could reach $90 billion to $95 billion. The $70 billion, though, is the cash Oracle itself expects to pay out, and it's the figure I'll use here.

Now set that against what the business brings in. Operating cash flow climbed 54% in fiscal 2026, which ended this past May, to a record $32 billion. Growth like that is impressive.

But Oracle spent $55.7 billion on capital expenditures in fiscal 2026, up 162% from the $21.2 billion it spent in fiscal 2025. The result was free cash flow of negative $23.7 billion. And the fiscal 2027 plan steps the spending up again.

To be fair, the headline comparison mixes two periods: the $70 billion is a forward guide for fiscal 2027, while the $32 billion is what fiscal 2026 delivered. That mismatch, though, is the point.

Even if operating cash flow grew another 54% this year, it would land near $49 billion -- still well short of the capital budget. On this net basis, Oracle plans to spend more than twice the cash its business produced last year.

Borrowed money and new shares

Where does the rest come from? Oracle expects to raise around $40 billion of debt and equity in fiscal 2027, Maxson said on the call.

That includes an at-the-market program the company announced in February, which allows Oracle to sell up to $20 billion of new stock over time at market prices.

The $40 billion would be new money, on top of what Oracle has already borrowed. The company issued $43 billion of senior notes in fiscal 2026, and as of May 31, it hadn't sold any shares under the new stock program.

And neither tool is free. Borrowing adds interest costs, and selling stock spreads future profits across more shares.

Of course, management has its reasons. Oracle's cloud infrastructure revenue grew 77% in fiscal 2026, to $18.1 billion, and the company is building the data centers its AI contracts will require.

Is the plan on track?

Thursday's report covers the fiscal first quarter -- the opening three months of the $70 billion year. The capital expenditure line in the cash flow statement offers the first check. The full-year plan implies reported spending of $90 billion to $95 billion (an average above $22 billion each quarter), so Thursday's number will show whether the spending is arriving on pace.

The financing section covers the other half. It shows how much the company borrowed during the quarter, and it shows any stock sold under the new program.

And operating cash flow deserves a look of its own. It's the one line that can shrink the gap rather than fill it.

Ultimately, my worry here isn't demand. My worry is the funding. A company planning to spend twice the cash its business produces is making an enormous bet, and the bet arguably only works if the AI build-out pays off on schedule.

Borrowed money and new shares can carry the plan for a while, but eventually the business itself has to produce the cash. Until operating cash flow starts to close the gap, I'd stay on the sidelines.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.