Oracle inventory dividend underneath risk amid huge AI push

Oracle inventory has been risky in latest months. Shares of the cloud titan rose from $85 in January 2023 to an all-time excessive of $346 in September 2025.

Down 58% from all-time highs, Oracle (ORCL) inventory is presently valued at a market cap of $411 billion and trades at $139.

Whereas ORCL is underneath strain, its income is rising quicker than it has in over 15 years.

Synthetic intelligence contracts are piling up. And Wall Road is paying shut consideration.

However there is a quantity that earnings traders cannot ignore: Free money movement has gone from a modest constructive to deeply, alarmingly destructive, all within the span of two years.

So what does that imply for Oracle as a dividend inventory? And will shareholders be frightened?

To know the strain on Oracle’s dividend, it’s important to perceive what the corporate is constructing.

“Demand for AI infrastructure, each GPU and CPU, continues to exceed provide,” Oracle CEO Clay Magouyrk instructed analysts on the corporate’s fiscal third-quarter 2026 earnings name. “That is straight seen in our $553 billion RPO.”

Oracle has secured greater than 10 gigawatts of energy and knowledge heart capability coming on-line over the subsequent three years.

The corporate additionally tripled its manufacturing websites and elevated rack output fourfold, all inside a single 12 months.

Associated: Financial institution of America sends stark Oracle inventory message to traders

That type of build-out prices critical cash.

• Capital expenditure totaled $21.22 billion in fiscal 12 months 2025. Analysts now count on that determine to balloon to $50.64 billion in FY26, a 138.7% leap in a single 12 months.

• CapEx is projected to attain $62.42 billion in FY27 and $73.30 billion in FY28.

The end result? Free money movement has collapsed.

To fund its AI investments, Oracle raised$30 billion via investment-grade bonds and convertible most popular inventory in February 2026, a part of a broader plan to elevate to $50 billion in debt and fairness this calendar 12 months.

That is quite a lot of debt for a corporation that additionally pays a dividend to shareholders.

Oracle pays an annual dividend of $2 per share, per MarketBeat. With the inventory buying and selling at $139.66 and a market cap of $411 billion, the overall annual dividend expense works out to roughly $5.75 billion.

Notably, ORCL inventory has elevated its annual dividend from $0.24 per share in 2014 to $2 per share in 2026. Nevertheless, this development was within the pre-AI period.

• Annual dividend per share: $2.00

• Dividend yield: Roughly 1.43% (primarily based on $139.66 share worth)

• Annual dividend expense: Roughly $5.75 billion

• Projected free money movement (FY26): -$23.28 billion

• Projected free money movement (FY27): -$27.63 billion

• Lengthy-term debt (LTM): $124.7 billion

• Complete liabilities (LTM): $206.2 billion

• Money and equivalents (LTM): $39.1 billion

• Money from operations (FY26 estimate): $25.68 billion

When free money movement is deeply destructive, dividends should be funded via debt, asset gross sales, or money reserves, none of which is a sustainable long-term technique.

Oracle’s money from operations is rising from $20.82 billion in FY25 to an estimated $25.68 billion in FY26 and $36.92 billion in FY27.

The free money movement deficit is completely pushed by the CapEx surge, not by a deteriorating enterprise.

On the earnings name, Magouyrk stated AI knowledge facilities are already producing gross margins above 30%, and that greater than 90% of dedicated capability is being delivered on or forward of schedule.

If you layer in Oracle’s higher-margin database and software program companies, the general margin image seems even higher.

In the meantime, earnings per share (GAAP) are projected to develop from $4.34 in FY25 to $5.85 in FY26 and $16.31 in FY2030, a 30.4% CAGR via 2030.

The $5.75 billion annual dividend invoice can be comparatively small in comparison with projected working money flows, and administration seems dedicated to sustaining it.

Nonetheless, it is a dividend inventory carrying $124.7 billion in long-term debt and burning via money at a historic tempo. Oracle has wager its stability sheet on AI. If demand holds, the payoff might be monumental.

However earnings traders ought to go in with eyes open. Oracle is not a sleepy dividend inventory proper now.

It is a high-stakes development play that additionally pays a dividend. The 2 can coexist, however the margin for error has gotten so much thinner.

Associated: Oracle dividend development alerts new period for cloud titan

This story was initially printed by TheStreet on Mar 28, 2026, the place it first appeared within the Investing part. Add TheStreet as a Most popular Supply by clicking right here.