Oracle Chairman and Co-Founder Larry Ellison speaks at the Oracle OpenWorld 2017 conference in San Francisco, California, United States, Sunday, October 1, 2017.
David Paul Morris | David Paul Morris Bloomberg | Getty Images
Oracle Shares of the database software provider fell 8% on Tuesday, their biggest drop in a year, after the database software provider reported a disappointing profit.
The stock’s worst day of the year was a 5.4% drop in May. The stock is still up about 68% in 2022, which would be its best annual performance since the dot-com boom in 1999.
After the close on Monday, Oracle reported fiscal second-quarter earnings of $1.47 per share, 1 cent below analysts’ average estimate, according to LSEG. Revenue rose 9% from the same period last year to $14.06 billion, below the average estimate of $14.1 billion.
Net income rose 26% to $3.15 billion, or $1.10 a share, from $2.5 billion, or 89 cents a share, a year ago. Oracle’s cloud services business revenue increased 12% year-on-year to US$10.81 billion, accounting for 77% of total revenue.
“For a stock that brought itself some lofty expectations, it’s a bit of a stumble,” analysts at KeyBank Capital Markets wrote in a note following Monday’s report. They still recommend buying the stock, And said, “We are still optimistic about Oracle entering 2025.”
Oracle expects revenue to grow 7% to 9% this quarter. At the midpoint of this range, revenue is approximately $14.3 billion. Analysts expected sales of $14.65 billion, according to LSEG. The company said it expected adjusted earnings per share of $1.50 to $1.54. Analysts expected earnings of $1.57 per share.
Oracle’s biggest growth engine is cloud infrastructure, and its competitors are cloud infrastructure. Amazon, Microsoft and Google As enterprises move workloads out of their own data centers.
The business is booming as demand for computing power to handle artificial intelligence projects soars. Oracle said revenue from its cloud infrastructure unit soared 52% from a year earlier to $2.4 billion.
Oracle said it had just Yuanallowing social media companies to leverage its infrastructure to help with various projects related to the Llama family of large-scale language models.
“Oracle Cloud Infrastructure trains some of the world’s most important generative artificial intelligence models because we are faster and cheaper than other clouds,” Oracle founder Larry Ellison said in a statement.
Piper Sandler analysts raised the stock’s price target to $210 from $185 “based on continued cloud momentum.” They cited a 20% increase in Oracle’s cRPO (current residual performance obligations). The figure refers to contract revenue that has not yet been booked.
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