Oracle Misses Earnings Estimates Despite AI-Driven Cloud Growth

 

Oracle (NYSE: ORCL) reported fiscal second-quarter earnings on Monday (December 9) that missed Wall Street expectations, despite a cloud business boom fueled by AI advancements. The database software giant reported quarterly revenues of $14.1 billion, rising 9% year-over-year (YoY), and adjusted earnings per share (EPS) of $1.47, up 10% YoY. Both data fall short of Wall Street forecasts of $1.48 EPS and $14.12 billion in revenue.

 

 

Earnings that missed estimates made Oracle stock plunge 7.8% after hours in the US market.

 

Aside from unsatisfactory earnings, this report presents the outstanding cloud business. Oracle's cloud infrastructure segment gained $2.4 billion, growing 52% and outperforming competitors in the hyperscale cloud market. CEO Safra Catz attributed this surge to record demand driven by AI initiatives. She highlighted that the Artificial Intelligence (AI) segment within the Cloud business achieved a 336% increase in GPU consumption, delivering the world's largest and fastest AI supercomputer. The AI rent computing power helped Oracle rapidly grow into the fourth enterprise cloud choice, following Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), and Google (NASDAQ: GOOGL).

 

Barclays analyst Raimo Lenschow remarked on Oracle's report by writing that Oracle's Q2 results were not negative. He added that quarterly revenue growth surpassed the first-quarter data, so the fiscal year guidance remained unchanged. Guidance at the earnings meeting will be very important.

 

Regarding the guidance, Catz expected third-quarter revenue to grow 9%-11%, with total cloud revenue jumping 25%-27%. EPS will be $1.41-$1.47 and will reduce 5 cents per share due to an investment loss in another company. Considering the remaining performance obligations surged 50% to $97 billion, Catz believed that Oracle's full-year revenue would be $25 billion as cloud growth accelerated.