Oracle sold $10 billion of new stock at $116 a share and $10 billion of notes yielding 7% to 8.65%, exhausting a $20 billion capital-raise limit it had only set on Oct. 28. Both deals closed Nov. 4. The stock now trades around the same $116 level, near its lowest close in a year, and the dilution is larger than the dollar limit suggested because the share price fell 11% between the investor day close of $144.54 and the pricing.
The share count jumped more than planned
The $10 billion equity tranche took 86.2 million shares, about a quarter more than the 69 million implied by the $145 level Oracle used when it outlined the program. Outstanding shares rise to roughly 3.11 billion from 3.02 billion at the end of August, a 3% increase that spreads future earnings across a wider base. The dividend obligation on the new shares comes to about $172 million a year at the current $0.50 quarterly payout.
Debt service is the heavier lift
The five note issues carry roughly $780 million of annual interest, adding more than half of fiscal Q1's $1.4 billion interest expense to the yearly run rate. Oracle's interest bill grew 29% in fiscal 2026 to $4.6 billion, then accelerated to 47% in the fiscal fourth quarter and 55% in the first quarter of fiscal 2027. The company said the raise covers its capital-market needs through fiscal 2030, with only refinancing of existing debt outside that envelope.
Spending still outpaces cash generation
Capital expenditures hit $28.5 billion in fiscal Q1, more than triple the $8.5 billion a year earlier as Oracle builds out cloud infrastructure. The entire $20 billion raise covers about 70% of that single quarter's outlay. Operating cash flow reached a record $23 billion, up 184% year over year, but capex exceeded it by roughly $5 billion. Management does not expect positive free cash flow until the second half of fiscal 2028. Remaining performance obligations stood at $664 billion at the end of August, and revenue is guided to grow 30% to 34% in the fiscal second quarter.
Valuation absorbs the dilution at this price
At $116 the stock trades around 10 times expected adjusted earnings for fiscal 2028, which ends May 2028. For a business growing revenue roughly 30%, that multiple leaves room for the extra 3% share count and the higher interest load. The question is whether the spending pace that made the raise necessary in the first place will moderate before the next fiscal cycle.