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It doesn’t take a fortune teller to discern that Oracle is in for a bumpy week.
The software giant is facing investor headwinds after a Monday quarterly earnings report revealed slightly under-target growth. The stock market reacted to the lackluster showing with a nearly 15% downturn on Tuesday.
The one-day drop nearly rivals Oracle’s dotcom-era losses in March 2002, when it hemorrhaged 15% of its share price, CNBC reported.
Overall, the company announced its quarterly revenue grew 9% year over year in US dollars, and it notched 13% growth in revenue from cloud services and license support. But first quarter 2024 revenue was still about $20 million short of projections. Analysts had forecast 8% revenue growth this quarter, compared with Oracle’s new 5% to 7% figure, according to CNBC.
Oracle CEO Safra Catz expressed optimism about the company’s position in the cloud services market, even if shareholders weren’t so enthusiastic.
“Oracle Cloud Infrastructure revenue grew 66% in Q1, much faster than our hyperscale cloud infrastructure competitors,” she said in a statement. “Total cloud services revenue, Infrastructure plus Applications, grew 30% to $4.6 billion in the quarter. Oracle Cloud Services plus License Support revenue now accounts for 77% of Oracle’s total revenue.”
The market’s crashing expectations come on the heels of a good year for Oracle, during which the stock price ticked up around 50% based on the promise of artificial intelligence and its penchant for hogging cloud resources, according to Reuters.
Oracle Chairman and CTO Larry Ellison, who lost roughly $17 billion in the stock downturn, told investors he’s still banking heavily on AI to buoy Oracle’s future.
“Is Generative AI the most important new computer technology ever? Maybe!” he said in a statement. “As of today, AI development companies have signed contracts to purchase more than $4 billion of capacity in Oracle’s Gen2 Cloud. That's twice as much as we had booked at the end of Q4.”
He noted that such Oracle technologies will be the foundation for AI-driven breakthroughs like “self-driving cars, molecular drug design, [and] voice user interfaces.”