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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.
Oracle in the past couple of years has slashed the money it spends buying back stock, one of the other ways companies return money to shareholders. As recently as 2021, Oracle repurchased $21 billion, an amount that shrank to just $600 million in fiscal 2025. Its dividend, in contrast, has risen 56% in that time period! Because Oracle is borrowing money to cover its cash shortfall, it is effectively borrowing more than it would if it suspended the dividend. Perhaps it will decide to cut off the dividend when it reports earnings in a few weeks, but there’s a couple of reasons why it likely won’t.
One is that co-founder and executive chair Larry Ellison is the biggest individual recipient of the dividend. He owns about 40.6% of the stock. As a result, he will earn about $2.3 billion of the dividend this year. That money surely comes in handy to support his lifestyle and perhaps to pay the interest on the loans he has taken out against his Oracle stock. Ellison is financially backing his son David’s $108 billion takeover bid for Warner Bros. Discovery right now: Cutting off the dividend could be problematic for the family. The other argument against a dividend cut is that there are some investment funds that only invest in dividend-paying stocks. Suspending the dividend could prompt those investors to sell Oracle, putting more pressure on its stock price. Still, for Oracle, whether to continue sending billions out the door on the dividend is a question that deserves more scrutiny.
Better Late Than Never
Apple is finally taking action to compete for AI-interested consumers. The Information today scooped the news that Apple is developing an AI-powered wearable pin the size of an AirTag that will be equipped with a couple of cameras, a speaker and microphones—allowing it to take pictures, videos and audio from a user’s surroundings. Apple is moving quickly on the device in hopes of releasing it by 2027—ensuring that it can compete with OpenAI, which hopes to come out with the first of its AI-powered devices before then.
Meanwhile, Bloomberg reported Wednesday that Apple plans to revamp Siri by turning it into an AI chatbot, running on an AI model developed by Google. The Siri plans, combined with the AI hardware, should position Apple to compete more effectively as AI becomes more mainstream—and without spending the hundreds of billions other companies are forking out for AI.
Nvidia CEO Jensen Huang is preparing for a trip to China later this month as the company works to regain its footing in this strategically important market, Bloomberg reported.
OpenAI Chief Financial Officer Sarah Friar said the company is “taping out” its custom inference chip—the final step before manufacturing—and touted the progress of its more than $500 billion Stargate infrastructure project in a panel at the World Economic Forum Wednesday.
Jeff Bezos’ space company, Blue Origin, is planning to build an ultrafast satellite internet service aimed at large companies, data centers and governments, the company said Wednesday. The service, TeraWave, would put Blue Origin in competition with SpaceX’s Starlink and Amazon’s Leo.
The Department of Justice on Wednesday named three people to a technical committee that will oversee the implementation of the remedy for Google’s illegal search monopoly. More here.
Recommendation app Yelp on Wednesday said it had agreed to acquire AI agent startup Hatch for $300 million, or roughly 12 times the startup’s annual recurring revenue.
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