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Oracle shares tumble following quarterly revenue shortfall
Oracle's stock price fell over 10% in after-hours trading on Wednesday after the cloud computing firm reported revenues of $16.1bn for the quarter ending in November, slightly below the $16.2bn analysts had anticipated.
Growth amid AI boom
Despite the miss, Oracle's overall revenue grew 14% year-over-year, driven by a 68% surge in sales at its AI division, Oracle Cloud Infrastructure (OCI). The company supplies critical computing power to major AI developers, including a $300bn, five-year deal with OpenAI announced in September.
That agreement briefly propelled Oracle chairman Larry Ellison to the top of the world's richest individuals list. However, Oracle's stock has since declined 40% from its peak three months ago, though it remains up by a third since January.
Cautious outlook and industry skepticism
In a statement accompanying the earnings report, Ellison struck a guarded tone, acknowledging rapid changes in AI technology and emphasizing the need for agility. He also outlined Oracle's "chip neutrality" policy, pledging to source GPUs from any manufacturer-including Nvidia-to meet customer demands.
"We will continue to buy the latest GPUs from Nvidia, but we need to be prepared and able to deploy whatever chips our customers want to buy."
Larry Ellison, Oracle Chairman and CTO
Investor concerns over AI spending and debt
Analysts remain divided over Oracle's trajectory. Jacob Bourne of Emarketer warned that the OpenAI partnership could signal overexposure to a customer facing profitability questions. He also highlighted concerns over Oracle's rising debt, which funded a record $18bn bond sale in September-one of the largest in tech history-to finance data center expansion.
Colleen McHugh, a consultant at Wealthify, told the BBC that tech stocks are "priced for absolute perfection," and even minor revenue misses trigger sharp sell-offs. Others, however, dismissed the market's reaction as overblown.
"This was nothing but a great quarter for Oracle. Revenue growth of 14% is accelerating."
Cory Johnson, Chief Market Strategist at Epistrophy Capital Research
Johnson noted that Oracle has secured $385bn in contracts over the past six months, including deals with Meta and Nvidia, but negative AI sentiment overshadowed the results.
Broader implications for AI and media ventures
Beyond its cloud business, Oracle's leadership has made headlines in entertainment. The Ellison family, known for supporting US President Donald Trump, recently acquired Paramount and is leading a bid to take over Warner Bros. Discovery.
As scrutiny intensifies over AI's long-term viability, Oracle's latest earnings report underscores the tension between aggressive investment and investor caution in the sector.
