Oracle sees revenue below estimates as cloud spending sputters
ORACLE projected current-quarter revenue below Wall Street targets on Monday (Sep 11) and narrowly missed expectations for the first quarter as a tough economy pressured cloud spending by businesses, sending its shares down 9 per cent in extended trading.
After a surge in cloud demand during the pandemic, businesses are rethinking their digitisation plans, hurting Oracle as it plays catch-up in a segment dominated by larger rivals such as Amazon Web Services and Microsoft.
Still, analysts have said that the rise in the adoption of artificial intelligence (AI) applications could boost Oracle’s cloud infrastructure business because the advances made in its networking technology are more suited to take on AI workloads.
“As of today, AI development companies have signed contracts to purchase more than US$4 billion of capacity in Oracle’s Gen2 Cloud. That’s twice as much as we had booked at the end of Q4,” Oracle chairman and CTO Larry Ellison said.
Ellison, a self-described close friend of Elon Musk, announced that the Tesla CEO’s AI startup xAI had signed a contract to train AI models in Oracle’s Gen2 Cloud.
He also said all nine utility companies owned by Berkshire Hathaway will replace their existing enterprise resource planning systems with Oracle’s Fusion Cloud applications.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Shares of Oracle have gained about 55 per cent so far this year.
The company forecast second-quarter revenue growth of between 5 per cent and 7 per cent, lower than analysts’ average estimate of 8.2 per cent, according to LSEG data. It also expects adjusted profit between US$1.30 and US$1.34 per share, compared with expectations of US$1.33.
Revenue for the first quarter stood at US$12.45 billion, slightly below estimates of US$12.47 billion.
Excluding items, it earned US$1.19 per share, compared with estimates of US$1.15. REUTERS
Share with us your feedback on BT's products and services
