Oracle Should (but Likely Won’t) Cut Its Dividend

Here’s a question: How much are big tech companies cutting back on sending money to shareholders as they ramp up their AI development spending? It’s a good time to ask: On Friday, Oracle is due to pay out its latest quarterly dividend of 50 cents a share. That will amount to $1.4 billion going out the door, which Oracle can ill afford. After all, the software and cloud firm burned through $10 billion in cash in the second quarter, thanks to a big increase in capital expenditures related to its AI cloud expansion.

And the financial pressure on Oracle is only going to intensify. In the fiscal year that ends in May, analysts estimate it will burn $22.9 billion in cash, according to S&P Global Market Intelligence. That compares with the $900 million cash burn it sustained last fiscal year and is a big switch from the $11.8 billion in free cash flow it produced in fiscal 2024. Analysts are currently projecting Oracle will continue burning cash until fiscal 2029. Cutting the dividend, at least for a few years, would be a smart way to save cash. At the current payout rate, Oracle’s dividend will cost $5.7 billion this fiscal year, up from $4.7 billion last fiscal year.