Oracle stock dividend under threat amid massive AI push

Oracle stock has been volatile in recent months. Shares of the cloud titan rose from $85 in January 2023 to an all-time high of $346 in September 2025.

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

While ORCL is under pressure, its revenue is growing faster than it has in over 15 years.

Artificial intelligence contracts are piling up. And Wall Street is paying close attention.

But there’s a number that income investors can’t ignore: Free cash flow has gone from a modest positive to deeply, alarmingly negative, all in the span of two years.

So what does that mean for Oracle as a dividend stock? And should shareholders be worried?

To understand the pressure on Oracle’s dividend, you have to understand what the company is building.

“Demand for AI infrastructure, both GPU and CPU, continues to exceed supply,” Oracle CEO Clay Magouyrk told analysts on the company’s fiscal third-quarter 2026 earnings call. “This is directly visible in our $553 billion RPO.”

Oracle has secured more than 10 gigawatts of power and data center capacity coming online over the next three years.

The company also tripled its manufacturing sites and increased rack output fourfold, all within a single year.

Related: Bank of America sends stark Oracle stock message to investors

That kind of build-out costs serious money.

• Capital expenditure totaled $21.22 billion in fiscal year 2025. Analysts now expect that figure to balloon to $50.64 billion in FY26, a 138.7% jump in a single year.

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

The result? Free cash flow has collapsed.

To fund its AI investments, Oracle raised$30 billion through investment-grade bonds and convertible preferred stock in February 2026, part of a broader plan to raise to $50 billion in debt and equity this calendar year.

That’s a lot of debt for a company that also pays a dividend to shareholders.

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

Notably, ORCL stock has increased its annual dividend from $0.24 per share in 2014 to $2 per share in 2026. However, this growth was in the pre-AI era.

• Annual dividend per share: $2.00

• Dividend yield: Approximately 1.43% (based on $139.66 share price)

• Annual dividend expense: Approximately $5.75 billion

• Projected free cash flow (FY26): -$23.28 billion

• Projected free cash flow (FY27): -$27.63 billion

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

• Total liabilities (LTM): $206.2 billion

• Cash and equivalents (LTM): $39.1 billion

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

When free cash flow is deeply negative, dividends must be funded through debt, asset sales, or cash reserves, none of which is a sustainable long-term strategy.

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

The free cash flow deficit is entirely driven by the CapEx surge, not by a deteriorating business.

On the earnings call, Magouyrk said AI data centers are already generating gross margins above 30%, and that more than 90% of committed capacity is being delivered on or ahead of schedule.

When you layer in Oracle’s higher-margin database and software businesses, the overall margin picture looks even better.

Meanwhile, earnings per share (GAAP) are projected to grow from $4.34 in FY25 to $5.85 in FY26 and $16.31 in FY2030, a 30.4% CAGR through 2030.

The $5.75 billion annual dividend bill is also relatively small compared to projected operating cash flows, and management appears committed to maintaining it.

Still, this is a dividend stock carrying $124.7 billion in long-term debt and burning through cash at a historic pace. Oracle has bet its balance sheet on AI. If demand holds, the payoff could be enormous.

But income investors should go in with eyes open. Oracle is not a sleepy dividend stock right now.

It’s a high-stakes growth play that also pays a dividend. The two can coexist, but the margin for error has gotten a lot thinner.

Related: Oracle dividend growth signals new era for cloud titan

This story was originally published by TheStreet on Mar 28, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.