Oracle shares dropped 7% in after-hours trading on Monday after the company reported fiscal second-quarter earnings and revenue that fell slightly short of Wall Street expectations.
The tech giant also issued a softer-than-anticipated forecast for the upcoming quarter.
Here’s how Oracle’s results compared to LSEG’s consensus:
- Earnings per share: $1.47 adjusted (vs. $1.48 expected)
- Revenue: $14.06 billion (vs. $14.1 billion expected)
Despite the misses, Oracle’s revenue grew 9% year-over-year, with net income increasing 26% to $3.15 billion.
The cloud services division, which makes up 77% of total revenue, saw a 12% boost, bringing in $10.81 billion.
AI Driving Cloud Growth
Oracle’s cloud infrastructure segment continued to expand rapidly, with revenue climbing 52% year-over-year to $2.4 billion.
This surge is fueled by rising demand for computing power tailored to artificial intelligence projects.
The company also signed an agreement with Meta, enabling the social media firm to utilize Oracle’s infrastructure for AI initiatives tied to the Llama family of large language models.
Oracle highlighted its competitive edge in AI, with its founder, Larry Ellison, noting that Oracle Cloud Infrastructure supports “several of the world’s most important generative AI models because we are faster and less expensive than other clouds.”
Tempered Forecast Raises Questions
For the current quarter, Oracle forecasts revenue growth of 7% to 9%, translating to about $14.3 billion at the midpoint—below the $14.65 billion analysts expected.
Adjusted earnings guidance ranged between $1.50 and $1.54 per share, compared to analysts’ projections of $1.57.
The company has leaned heavily on its cloud business to drive growth as businesses increasingly adopt AI workloads.
In September, Oracle raised its fiscal 2026 revenue outlook to $66 billion, driven by advancements in cloud offerings.
This included its new computing clusters using Nvidia’s Blackwell GPUs, which were designed to handle AI model training and related tasks.
Best Year in Over Two Decades
Even with these short-term setbacks, Oracle’s stock remains up more than 80% this year, positioning the company for its strongest annual performance since 1999.
As businesses continue transitioning workloads to the cloud, Oracle’s ability to capitalize on AI-driven demand will be key to sustaining this growth trajectory.
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