Morgan Stanley: Oracle’s Financing Path Clearer, Maintains $210 Target
TREE NEWS reports: Oracle is expected to need approximately $220 billion in capital expenditures to fund about 6 gigawatts of remaining data center capacity, 2026. The bank maintained its “Equal-weight” rating and $210 price target on the stock, citing a clearer funding and return framework.
Vendor financing, customer-provided hardware, and prepayments are expected to reduce upfront cash pressure. Oracle estimates it still needs to raise about $20 billion. Management expects free cash flow to turn positive in the second half of fiscal 2028.
Industry Analysis and Implications
The massive capex figure underscores the scale of the AI infrastructure buildout and its impact on cash flow. Oracle’s ability to secure financing without straining its balance sheet is critical. The use of vendor financing and customer prepayments reflects creative structuring to share the capital burden with partners and clients.
For investors, the key will be execution: delivering capacity on time and maintaining margins. The buildout pace will directly affect revenue release and cash flow improvement. Expense leverage and the financing mix will also influence the quality of expansion. If Oracle can hit its targets, the stock could re-rate; delays or margin pressure would be a risk.
Forward-Looking Perspective
Oracle aims to reach approximately 10 gigawatts of capacity by the end of fiscal 2028. The coming quarters will be closely watched for progress on financing, construction timelines, and customer commitments. The broader AI infrastructure sector faces similar challenges, and Oracle’s approach may serve as a template for others. However, rising interest rates and tighter credit could complicate financing plans. Execution remains the pivotal factor.
