Oracle's adjusted operating income of US$6.7-billion missed Wall Street’s average target of US$6.8-billion, according to LSEG data.TOM BERGIN/Reuters
Oracle missed Wall Street estimates for second-quarter revenue and operating profit on Wednesday, a sign that corporate spending on its cloud services may be cooling amid broader concerns of a bubble in the artificial intelligence market.
Shares of the Austin, Texas-based company fell 5.5 per cent in extended trading.
Oracle posted quarterly adjusted profit of US$2.26 per share, above analyst estimates of US$1.64, according to LSEG data. However, Oracle said both adjusted and unadjusted profits were higher on a one-time US$2.7-billion pretax gain on selling its stake in chip designer Ampere Computing.
Adjusted operating income of US$6.7-billion missed Wall Street’s average target of US$6.8-billion, according to LSEG data.
Larry Ellison, Oracle chairman, said the firm chose to sell its shares because it plans to have a policy of neutrality about which chips it uses in its data centers and that “we no longer think it is strategic for us to continue designing, manufacturing and using our own chips in our cloud datacenters.”
Ellison said that Oracle would continue to buy Nvidia’s latest chips, but that “we need to be prepared and able to deploy whatever chips our customers want to buy.” Oracle also reported US$523-billion in future contracts, up 14.94 per cent from the US$455-billion it reported in September, when it revealed a slew of cloud computing deals with ChatGPT creator OpenAI and others that sent its shares skyrocketing. Oracle is building massive data centers for OpenAI, which Reuters has reported is working with Broadcom to develop its own custom AI chip.
Shares of Nvidia and Broadcom were both down less than 1 per cent after Oracle’s results.
Oracle reported total revenue of US$16.06-billion for the second quarter, compared with analysts’ average estimate of US$16.21-billion, according to data compiled by LSEG.