Shares of cloud computing giant Oracle plunged more than 10% in after-hours trading on Wednesday after the company's revenues fell short of Wall Street expectations. The company reported revenue of $16.06bn (£11.99bn) for the three months that ended in November, compared with the $16.21bn projected by analysts. Revenue growth was up 14%, with a 68% surge in sales at its AI business, Oracle Cloud Infrastructure (OCI), the company said.
OCI services major AI technology developers whose demand for Oracle's AI infrastructure helped the company's shares reach new highs this fall but Wednesday's results failed to quell fears about a potential AI bubble. In September, Oracle inked a highly sought-after contract with ChatGPT-maker OpenAI, which agreed to purchase $300bn in computing power from Oracle over five years.
Oracle chairman and chief technology officer Larry Ellison briefly became the world's richest man in September. However, Oracle stock has lost 40% of its value since peaking three months ago. Still, shares are up more than a third since the start of the year.
In a statement issued on Wednesday, Mr. Ellison struck a cautious tone, stating, There are going to be a lot of changes in AI technology over the next few years and we must remain agile in response to those changes. He emphasized a policy he called chip neutrality, where Oracle would buy chips from any maker to serve client needs.
Investors are now weighing whether Oracle's massive OpenAI partnership might mean overexposure with a customer currently in the spotlight over profitability concerns. Emarketer analyst Jacob Bourne noted that Oracle faces scrutiny over increased debt amassed to fund its data centers, alongside its recent record $18bn bond sale—the largest in the tech sector.
Despite the recent surge in shares, this revenue miss will likely exacerbate concerns over its OpenAI dealings and high AI spending.
OCI services major AI technology developers whose demand for Oracle's AI infrastructure helped the company's shares reach new highs this fall but Wednesday's results failed to quell fears about a potential AI bubble. In September, Oracle inked a highly sought-after contract with ChatGPT-maker OpenAI, which agreed to purchase $300bn in computing power from Oracle over five years.
Oracle chairman and chief technology officer Larry Ellison briefly became the world's richest man in September. However, Oracle stock has lost 40% of its value since peaking three months ago. Still, shares are up more than a third since the start of the year.
In a statement issued on Wednesday, Mr. Ellison struck a cautious tone, stating, There are going to be a lot of changes in AI technology over the next few years and we must remain agile in response to those changes. He emphasized a policy he called chip neutrality, where Oracle would buy chips from any maker to serve client needs.
Investors are now weighing whether Oracle's massive OpenAI partnership might mean overexposure with a customer currently in the spotlight over profitability concerns. Emarketer analyst Jacob Bourne noted that Oracle faces scrutiny over increased debt amassed to fund its data centers, alongside its recent record $18bn bond sale—the largest in the tech sector.
Despite the recent surge in shares, this revenue miss will likely exacerbate concerns over its OpenAI dealings and high AI spending.
