Oracle Stock Drops After Missing Revenue Expectations and Slowing Cloud Growth
Oracle Corp’s stock declined on Tuesday after the company reported second-quarter fiscal year revenues that did not meet market expectations. Earnings per share were $1.34, which exceeded analysts’ estimates of $1.32, but market participants were disappointed with revenues of $12.94 billion and a slowing cloud growth rate of 25%. Additionally, management’s future guidance disappointed analysts, with some expressing concern about infrastructure spending.
Earnings Forecasts and Company News
Oracle Corp’s stock fell on Tuesday after the tech giant announced second-quarter fiscal year earnings that did not align with market expectations regarding revenues and cloud growth. Adjusted earnings for the quarter rose 11% from last year to $1.34 per share, surpassing Wall Street estimates of $1.32. Total revenues increased by 5% during the same period to $12.94 billion, while cloud revenues grew by 25%. However, analysts were disappointed with the company’s growth rates for these metrics, as they slowed from 9% and 30%, respectively, in the first fiscal quarter.
Future Growth Projections and Company Outlook
Investors seemed to disregard positive comments from the company’s CEO, Safra Catz, who stated that demand for cloud and generative artificial intelligence was “tremendous,” noting remaining performance commitments exceeding $65 billion, which surpasses Oracle’s annual revenues. The company’s founder and CTO, Larry Ellison, indicated that demand was “through the roof,” noting that the company is expanding 66 of its data centers and building 100 new ones.
Concerns Regarding Operating Margins and Acquisitions
This expansion raised concerns about operating margins during the company’s earnings call due to increased capital expenditures. Ellison suggested that the company could build data centers faster and cheaper than its competitors. Catz also commented on the concerns regarding the acquisition of Cerner and its impact on earnings, saying, “We expect Cerner to be a growth story in the next fiscal year.”
Impact of News on Oracle’s Share Price
Oracle’s stock fell by 12% to $100.80 around 2:30 PM Eastern Time, yet it remains up more than 20% for the year.
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Source: https://www.investopedia.com/oracle-stock-plunges-after-revenue-miss-slower-cloud-growth-8414668
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