Oracle shares fell more than 7% on Tuesday after the company posted fiscal second-quarter results that missed analysts’ expectations and provided a forecast below market predictions.
Key Results vs. Estimates
- Earnings per share: $1.47 adjusted (vs. $1.48 expected)
- Revenue: $14.06 billion (vs. $14.1 billion expected)
Oracle’s second-quarter revenue grew 9% year-over-year, while net income rose 26% to $3.15 billion, or $1.10 per share, compared to $2.5 billion, or 89 cents per share, a year ago.
Cloud Services Drive Growth
Oracle’s cloud services unit, which accounts for 77% of total revenue, grew by 12% to $10.81 billion. Its cloud infrastructure business, a key growth driver, surged 52% year-over-year to $2.4 billion, fueled by increasing demand for AI-focused computing power.
The company recently signed a deal with Meta to support AI-related projects for its Llama large language model family.
“Oracle Cloud Infrastructure trains several of the world’s most important generative AI models because we are faster and less expensive than other clouds,” Oracle founder Larry Ellison said.
Forecast Disappoints
For the current quarter, Oracle expects:
- Revenue growth: 7% to 9%, translating to approximately $14.3 billion (vs. $14.65 billion expected).
- Adjusted EPS: $1.50 to $1.54 (vs. $1.57 expected).
Despite the disappointing guidance, Oracle has been expanding its AI capabilities. In September, the company boosted its fiscal 2026 revenue guidance to $66 billion and announced plans to sell computing clusters powered by over 131,000 Nvidia Blackwell GPUs, specifically for AI model training.
Stock Performance
Oracle shares have risen more than 80% year-to-date as of Monday’s close, marking their best annual performance since 1999. However, Tuesday’s selloff highlights investors’ concerns about slower-than-expected growth despite the company’s strong push into cloud and AI markets.
