Oracle Shares Drop 7% Following Earnings Miss and Disappointing Forecast

 

Oracle Chair and Chief Technology Officer Larry Ellison speaks at the Oracle OpenWorld conference in San Francisco 

Oracle's shares fell 7% in extended trading on Monday after the company reported weaker-than-expected fiscal second-quarter earnings and issued a forecast that disappointed Wall Street expectations.

Fiscal Second-Quarter Highlights:

• Adjusted earnings per share: $1.47 vs. expected $1.48
• Revenue: $14.06 billion vs. $14.1 billion expected

Despite a 9% year-over-year increase in total revenue, the company’s results fell short of predictions. Net income grew 26% to $3.15 billion, or $1.10 per share, up from $2.5 billion, or 89 cents per share, a year ago.

Cloud Business Remains a Key Growth Driver

Oracle’s cloud services segment continues to lead growth, with revenue in that area climbing 12% to $10.81 billion—representing 77% of the company’s total revenue.

The company highlighted its booming cloud infrastructure division, which has become a central player in the AI computing space. Revenue in this unit soared 52% from the previous year to $2.4 billion. The demand for computing power, largely driven by AI projects, has fueled this growth.

Strategic Meta Partnership

Oracle recently signed a deal with Meta, enabling the social media giant to utilize Oracle’s infrastructure for projects related to the Llama series of large language models. Oracle founder Larry Ellison praised their competitive edge:

"Oracle Cloud Infrastructure trains several of the world’s most important generative AI models because we are faster and less expensive than other clouds."

Forecast: Below Expectations

For the upcoming quarter, Oracle expects revenue growth of 7% to 9%, placing the projected midpoint at $14.3 billion. However, this is below the $14.65 billion analysts had anticipated.

The company also projects adjusted earnings per share between $1.50 and $1.54, below the expected $1.57.

Broader AI Ambitions

In September, Oracle raised its fiscal 2026 revenue forecast to $66 billion, $1.5 billion higher than analysts had estimated. Additionally, Oracle has been promoting its computing clusters powered by over 131,000 Nvidia “Blackwell” GPUs, specialized for AI model training and tasks related to machine learning.

Stock Performance

Despite this recent decline, Oracle's stock is up more than 80% year-to-date and is on track for its best annual performance since 1999.