Oracle Shares Fall 8% After Earnings Miss Amid Currency Headwinds

Oracle shares slump after earnings fail to impress.

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Dec 10, 2024
Summary
  • Adjusted EPS came in at $1.47, narrowly missing the anticipated $1.48.
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Oracle Corporation (ORCL, Financials) shares dropped 8% following its fiscal second-quarter earnings announcement, which revealed revenue of $14.06 billion, a 9% year-over-year increase but slightly below analysts' expectations of $14.12 billion.

At $1.47, adjusted profits per share fell short of the expected $1.48 by barely.

With Oracle Cloud Infrastructure revenue rising 52% and overall cloud revenue approaching $10.8 billion, the company's performance was much enhanced by its cloud operations. Reflecting strong demand for artificial intelligence-driven services, GPU utilization for artificial intelligence workloads surged 336%. These growth numbers, meantime, were unable to counterbalance the response of the market to the revenue deficit. Analysts linked the loss to the strong U.S. dollar rather than declining demand, implying the currency headwinds concealed otherwise good operational performance.

Previously rising 81% earlier this year on hope for its cloud and artificial intelligence projects, Oracle's shares dropped nearly 7% in after-hours trading Monday and then dropped 8% in premarket activity Tuesday. The decline in the stock emphasizes the high market expectations for the firm in the cloud computing and artificial intelligence areas with great competition.

Meanwhile, Oracle revealed intentions to increase its capital spending in fiscal 2025 in a calculated reaction to growing artificial intelligence demand. It also revealed a collaboration with Meta Platforms (META, Financials), using Oracle's AI Cloud Infrastructure to improve its capacities.

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