Oracle’s shares plunged 11% in after-hours trading on Wednesday following quarterly revenue that missed analyst expectations, despite strong demand for its AI infrastructure services.
The weak report also weighed on AI-related stocks, with Nvidia and AMD each dropping about 1%, and cloud provider CoreWeave falling over 3%.
Oracle posted adjusted earnings per share of $2.26, beating the expected $1.64, but revenue of $16.06 billion fell short of the $16.21 billion consensus. For the next quarter, the company forecast adjusted earnings between $1.70 and $1.74 per share and 19% to 21% revenue growth, slightly below analyst estimates.
In the quarter ending November 30, revenue rose 14% year-on-year, with net income rising to $6.14 billion, or $2.14 per share. Cloud revenue hit $7.98 billion, outpacing forecasts, while cloud infrastructure revenue surged 68% to $4.1 billion. Software revenue, however, declined 3% to $5.88 billion.
Oracle’s remaining performance obligations—a measure of contracted but unrecognised revenue—jumped 438% to $523 billion, driven by “new commitments from Meta, Nvidia and others,” according to CFO Doug Kehring. The company expects an additional $4 billion in revenue from this backlog in fiscal 2027.
Oracle’s expansion into cloud infrastructure sees it competing with Amazon, Microsoft, and Google, all investing heavily in data centres and AI hardware. OpenAI has committed over $300 billion to Oracle’s infrastructure over five years.
Investors have expressed concern about Oracle’s rising debt amid these ambitious investments. Kehring reassured that Oracle plans to maintain its investment-grade credit rating and cited financing options that reduce borrowing needs.
Capital expenditure guidance was raised to about $50 billion this year, up from $35 billion in September, compared to $21.2 billion last year. Free cash flow for the quarter was negative roughly $10 billion.
After a sharp 23% drop in November—the worst since 2001—Oracle’s shares remain 32% below September’s peak but are up 34% for the year.
Leadership changes included naming Clay Magouyrk and Mike Sicilia as co-CEOs, succeeding Safra Catz. Oracle also launched AI agents to automate finance, HR, and sales functions.
The company’s earnings benefitted from a $2.7 billion pre-tax gain from selling its stake in Ampere, acquired by SoftBank for $6.5 billion.