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Oracle’s rampant cloud growth wasn’t enough for Wall Street, and its stock slides after-hours
- Oracle missed Wall Street’s earnings and sales targets as decline elsewhere in its business outweighed the impressive rate of cloud revenue growth.
- Oracle reported second-quarter earnings of $1.47 per share, just shy of the $1.48 analyst consensus estimate. Revenue for the period rose 9% to $14.06bn, missing the $14.1bn expectation.
- The impressive growth in Oracle's cloud unit comes as more companies move computing workloads out of their own data centres due to increased need for computing power for their artificial intelligence projects.
- Oracle reported growth in the AI segment of its cloud infrastructure business, with graphics processing unit consumption up 336% from a year earlier.
- Oracle revealed that it has signed another agreement with Meta Platforms Inc. to use its cloud infrastructure to power various generative AI projects related to its Llama large language models.
- Despite the impressive cloud growth, Oracle's cautious guidance for the current quarter led investors to drop the stock almost 8% in the extended trading session.
- Oracle's growth engine is cloud infrastructure business, which specializes in providing computing services for enterprises.
- Oracle launched its cloud infrastructure business in 2016, but it struggled to gain much traction until about 2022.
- Oracle's biggest challenge going forward will be to move beyond their technical pitch, focused on speed and performance, to tell a broader story about how integrated apps running on the same infrastructure can deliver better decision-making insights and stronger foundations for AI.
- Despite the miss on guidance, Oracle's stock is up more than 80% in the year to date.
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