Oracle Stock Falls On Earnings, Sales Miss; Tech Giant Touts Strong AI Demand

Oracle Corporation (ORCL) shares fell in after-hours trading on Monday, December 9, following the company's fiscal second-quarter earnings report. Despite reporting adjusted earnings per share (EPS) of $1.47 and revenue of $14.06 billion, both figures missed Wall Street expectations. The company's stock price dropped by approximately 8% in extended trading.

Oracle's earnings report highlighted strong demand for AI services, with Oracle Cloud Infrastructure (OCI) revenue up 52% year-over-year. This growth is driven by AI startups renting computing power, as well as Oracle's partnership with Meta to use OCI for AI projects related to the Llama family of large language models. Additionally, Oracle is working with Microsoft and OpenAI to deliver supplemental computing capacity.



However, Oracle's cloud infrastructure revenue growth of 52% in Q2 fell short of analyst expectations, which were around 57%. Despite the miss, Oracle CEO Safra Catz highlighted record-level AI demand as a key driver for the business. She stated, "Record level AI demand drove Oracle Cloud Infrastructure revenue up 52% in Q2, a much higher growth rate than any of our hyperscale cloud infrastructure competitors."

Oracle's strategic partnerships, such as with Meta and OpenAI, have significantly contributed to its earnings and sales growth, particularly in the cloud infrastructure segment. The agreement with Meta allows the social media giant to use Oracle's cloud computing services for its various projects related to the Llama family of large language models. This deal, along with Oracle's partnership with OpenAI, has driven demand for Oracle Cloud Infrastructure, which grew by 52% in the reported quarter. These partnerships have not only expanded Oracle's customer base but also positioned the company as a key player in the AI landscape, driving its stock price up by over 80% in 2024.



In conclusion, Oracle's earnings and sales miss in the fiscal second quarter led to a decline in its stock price. However, the company's strong AI demand and strategic partnerships have driven growth in its cloud infrastructure segment. As AI continues to grow, investors can expect Oracle to expand its AI offerings, potentially including more AI-as-a-service options and collaborations with other tech giants.