Oracle Stock Dips 4% Following Underwhelming Quarterly Report and Forecast

Key moments

Oracle’s Cloud Growth Offset by Overall Revenue Miss

Oracle Corporation experienced a 4% decline in its stock value following the release of its fiscal third-quarter results, which revealed figures below analysts’ projections. The company reported adjusted earnings per share of $1.47 and revenue of $14.13 billion, compared to the expected $1.49 and $14.39 billion, respectively. Despite a 6% year-over-year increase in overall revenue and a 22% rise in net income, the results did not meet market expectations.

A significant highlight of the report was the robust growth of Oracle’s cloud infrastructure segment. Fueled by the surging demand for computing power to support artificial intelligence projects, this segment saw a 49% increase in revenue, reaching $2.7 billion. Oracle’s cloud services business, in general, experienced a 10% year-over-year increase, now representing 78% of the company’s total sales. Larry Ellison, Oracle’s Chair, emphasized the company’s commitment to expanding its data center capacity, stating plans to double it within the current calendar year.

However, Oracle’s forecast for the upcoming quarter fell short of analyst expectations. The company projected revenue growth of 8% to 10%, while analysts had anticipated approximately 11%. Similarly, adjusted earnings per share are expected to be between $1.61 and $1.65, below the projected $1.79.

Safra Catz, Oracle’s CEO, attributed the lower earnings forecast to losses from an investment in another company. Furthermore, Oracle is increasing capital expenditures, and has signed many new contracts, including those related to the “Stargate” project. Despite the current stock dip, Oracle increased its quarterly dividend from 40 cents to 50 cents per share.