Oracle Has Some Cloudy Skies On The Horizon

Oracle Has Some Cloudy Skies On The Horizon
Stéphane Renevier, CFA

3 months ago2 mins

What’s going on here?

Oracle’s stock took a dip after its quarterly sales failed to dazzle investors.

What does this mean?

Oracle, the enterprise software titan, has long been a barometer of corporate demand for tech. And for most of this year, the readings were optimistic – with its stock surging by a sturdy 55%. But this uptrend, like all good things, ultimately came to an end: Oracle’s stock suffered its biggest one-day drop since March 2020. And the company didn’t just miss its revenue targets last quarter: it dialed down its projections for the current quarter too. There are a couple of reasons for that, but the main thorn in Oracle’s side is slowing growth in cloud sales – which signals potential headwinds for its ambitious cloud market expansion. That’s not to say it’s all stormy weather, though: the firm’s profit growth is on a solid footing.

Oracle stock
Source: Google Finance

Why should I care?

For markets: Clouded aspirations.

Oracle, traditionally celebrated for its database prowess, is now trying to climb the ranks as a cloud-sector contender too – hoping to stand toe-to-toe with behemoths like Amazon and Microsoft. But the journey is proving challenging so far. With companies recalibrating their post-pandemic digital strategies, and with established players capturing clients’ attention, Oracle’s cloud ambitions are set to face stiff competition.

Oracle cloud services revenue

The bigger picture: AI’s silver lining.

Oracle’s foray into AI has been met with both excitement and skepticism. On one hand, the firm’s been touting contracts worth over $4 billion from its AI-focused cloud service, painting a promising picture. On the other, though, Oracle’s cloud infrastructure growth has been tapering off lately. Granted, the immediate revenue impact of AI remains a topic of debate – and the long-term potential of this technology could still be a game-changer for Oracle. But for now, investors are watching closely for some more tangible results.



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