Oracle plummets 12% this Tuesday after the publication of income and forecasts weaker than expected. The software company reported revenues totaling US412,450 millionbelow the US$12.47 billion that analysts surveyed by LSEG, formerly known as Refinitiv, had predicted.
The fall of the technology firm also impacted other competing companies in the cloud field, such as: Amazon, Alphabet (Google’s parent company) and Microsoftwhich also experience a drop in their shares.
The experts of Morgan Stanley express their “serious doubts” about the moment when the income of artificial intelligence will translate into profits for the entire sectoraccording to a Bloomberg report.
The decline in cloud sales Oracle contrasts with its overall results. The leading technology company announced a net profit of $2.42 billion in its fiscal first quarter, which ended August 31.
Oracle has highlighted the risks associateds with investment in technology stocks on a day when all eyes are on this sectorand not only in Oracle. In Europe, the packaging company Smurfit Kappa suffered a 13% drop on the stock market after announcing a merger with WestRock. Furthermore, the giant Manzana is about to unveil a new product line, and Arm, the SoftBank-owned chip designer, prepares for largest initial public offering of the year. As a result, the Nasdaq 100 index recorded a decline of 0.3%, thus halting the 1.2% increase seen yesterday.
Despite this, the increase in adoption of artificial intelligence applications (AI) could have a positive impact on Oracle’s cloud infrastructure business. Advances in its networking technology position it ideally to handle AI-related workloads, according to expert analysis.
Larry Ellisonpresident and CTO of Oracle, reported: “To date, theAI companies have signed contracts for more than $4 billion of capacity in Oracle’s Gen2 cloud. “This represents double what we had booked at the end of the fourth quarter.”
The value of the company’s shares has increased of approximately 55% so far this year.
The fastest growing area for Oracleinfrastructure as a service, has recorded an impressive increase of 66%, reaching $1.5 billion in revenue. However, cloud services revenue has also seen solid growth, increasing by 30% to $4.6 billion.
Total revenue for the quarter reached $12.45 billion, slightly below analyst estimates of $12.47 billion, according to data provided by LSEG.
Excluding one-time items, the company achieved earnings of $1.19 per share, beating estimates of $1.15 per share.
Source: Ambito
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