Oracle Stock Tumbles as Earnings Miss Estimates, Cloud Growth Continues
Oracle Corporation’s stock fell nearly 8% in after-hours trading following the release of its fiscal second-quarter earnings report, which missed analyst expectations and provided weaker guidance for the current quarter. Despite the setback, the company’s cloud services, driven by strong demand for AI-related infrastructure, continued to show robust growth.
The tech giant reported revenue of $14.1 billion for the quarter, representing a 9% year-over-year increase. Profit for the period stood at $4.21 billion, or $1.47 per share. However, Oracle’s forecast for the current quarter’s revenue growth, projected between 7% and 9%, fell short of analyst estimates of $14.65 billion.
Oracle’s cloud services business, which includes high-profile customers such as OpenAI, xAI, and Nvidia, grew 12% compared to the same period last year. This segment now accounts for 77% of Oracle’s total quarterly revenue, highlighting the company’s successful pivot towards cloud-based offerings.
The company’s stock performance has been remarkable this year, surging 80% and propelling Oracle’s market value from below $165 billion to over $500 billion. However, the recent earnings miss and subsequent stock decline reflect the high expectations set by investors and analysts following a bullish September analyst day.
Oracle faces stiff competition in the cloud infrastructure market from tech giants like Google, Amazon Web Services, and Microsoft. Despite this, CEO Safra Catz emphasized Oracle’s cloud speed and cost advantages, positioning the company as the preferred choice for AI workloads.
In a significant development, Oracle announced a deal with Meta to provide AI cloud infrastructure for developing Llama AI models. This partnership underscores Oracle’s growing presence in the AI infrastructure space.
The recent stock price surge has also had a notable impact on co-founder Larry Ellison’s net worth, elevating his position to third on the Forbes Real-Time Billionaires list.
As Oracle continues to navigate the competitive cloud computing landscape, investors and analysts will be closely watching the company’s ability to capitalize on the growing demand for AI-related services while meeting the high expectations set by its recent market performance.
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