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 agreed to 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 after the announcement. However, the firm's shares have lost 40% of their value since peaking three months ago. Still, they are up by more than a third since the start of the year.
In a statement issued on Wednesday, Mr Ellison struck a cautious tone, remarking that there are going to be many changes in AI technology over the next few years. We must remain agile in response to those changes, he wrote. He also emphasized a policy called chip neutrality, indicating that Oracle would buy chips from any maker to serve clients.
Oracle is involved in multiple AI infrastructure arrangements that have raised concerns of 'circular financing' deals, where companies finance purchases of their own products and services. Analyst Jacob Bourne from Emarketer noted that Oracle's earnings have come under scrutiny as investors evaluate the implications of its substantial partnership with OpenAI amid growing profitability concerns.
Recently, Oracle raised a record $18bn in a massive bond sale to fund its extensive investments in infrastructure. Despite buoyancy from earlier partnerships, this latest missed revenue target may amplify investor concerns regarding Oracle's ambitious AI strategy.
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 agreed to 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 after the announcement. However, the firm's shares have lost 40% of their value since peaking three months ago. Still, they are up by more than a third since the start of the year.
In a statement issued on Wednesday, Mr Ellison struck a cautious tone, remarking that there are going to be many changes in AI technology over the next few years. We must remain agile in response to those changes, he wrote. He also emphasized a policy called chip neutrality, indicating that Oracle would buy chips from any maker to serve clients.
Oracle is involved in multiple AI infrastructure arrangements that have raised concerns of 'circular financing' deals, where companies finance purchases of their own products and services. Analyst Jacob Bourne from Emarketer noted that Oracle's earnings have come under scrutiny as investors evaluate the implications of its substantial partnership with OpenAI amid growing profitability concerns.
Recently, Oracle raised a record $18bn in a massive bond sale to fund its extensive investments in infrastructure. Despite buoyancy from earlier partnerships, this latest missed revenue target may amplify investor concerns regarding Oracle's ambitious AI strategy.
