NEW YORK, July 20, 2026, 09:05 EDT
- Oracle was quoted at $125.28 ahead of Monday’s open, a decline of 0.9%.
- An equity offering of $20 billion at Friday’s price would increase the number of shares outstanding by 5.5%.
- S&P projects Oracle’s free-cash-flow shortfall for fiscal 2027 will near $42 billion.
Oracle’s dilution cost has increased following its 63% share price drop. Offloading $20 billion in stock around Friday’s closing price would mean issuing roughly 158 million shares. Preliminary estimates suggest this represents 5.5% of Oracle’s outstanding shares.
At its 52-week peak, the equivalent raise would have required approximately 58 million shares. The drop in share price has almost tripled the prospective dilution.
As of 09:05 EDT, the U.S. cash market was yet to begin trading. Oracle shares were poised to open at $125.28, down 0.9%, while U.S. index futures traded higher.
Oracle ended Friday’s session at $126.41, having reached a 52-week low of $121.50. The share price rose 1.8% that day, though it declined roughly 10% over the week.
The identical funding goal now results in substantially different dilution:
| Share price reference | Shares required to reach $20 billion | Portion of present 2.88 billion shares |
|---|---|---|
| Friday’s closing price: $126.41 | 158 million | 5.5% |
| 52-week peak: $345.72 | 58 million | 2.0% |
These figures are early estimates. They do not factor in fees, adjustments in price, or any combinations of different financing options.
Demand continues to be robust. Revenue for fiscal 2026 increased by 17% to reach $67.4 billion. Cloud infrastructure revenue in the fourth quarter surged 93% to $5.8 billion.
Remaining performance obligations climbed to $638 billion, an increase of 363%. According to Oracle, $75 billion in significant AI contracts involve prepaid or customer-provided chips and hardware, a model expected to lower Oracle’s capital requirements.
Cash conversion paints a tougher picture. Capital expenditures totaled $55.7 billion, representing roughly 83% of yearly revenue.
Operating cash flow reached $32.0 billion, while free cash flow came in at negative $23.7 billion, equating to a negative 35% margin.
For fiscal 2026, Oracle secured $43 billion in debt and $5 billion through equity. The company anticipates obtaining about $40 billion in further financing for fiscal 2027.
The plan features the already disclosed $20 billion at-the-market share initiative. Oracle stated it does not anticipate additional debt issuance in calendar 2026.
S&P Global Ratings, a division of S&P Global NYSE:SPGI, downgraded Oracle to BBB- on July 9, placing it a single step above speculative grade. The ratings agency projects that free operating cash flow for fiscal 2027 will be roughly $42 billion below expectations.
S&P anticipates adjusted leverage will remain over four times for a period of two years. The agency estimates that OpenAI accounts for approximately half of Oracle’s $638 billion backlog.
Tyler Richey, technical analyst at Sevens Report Research, described the downgrade as a “canary in the coal mine” for equities. Business Insider
The drop in Oracle’s shares has lowered its market value, though its requirement for capital remains the same. As of Friday’s close, the stock was trading at 21.7 times its trailing earnings. Based on management’s early projection for adjusted earnings in fiscal 2027, the multiple stands at 15.7.
Oracle forecasts fiscal 2027 revenue at $90 billion, with adjusted earnings projected at $8.05 per share. The outlook indicates revenue growth of about 34%. Adjusted earnings would increase 18% after accounting for certain one-time factors.
The sector faces its next test on Wednesday, when Alphabet NASDAQ:GOOGL is scheduled to report results after markets close on July 22. The company’s cloud revenue and capital expenditure outlook may influence investor views on Oracle’s AI expansion.
Risks: Oracle’s performance relies on quick backlog turnover, accessible financing and the capacity of major clients to meet payments. Prepaid hardware may help reduce cash demands. A reduced issuance price would cause additional dilution.
Investors now look beyond backlog growth as a sole measure. Oracle needs to finance expanded capacity but must avoid greater dilution if its share price falls.
