Market Commentary

Oracle Drops as Q2 Outlook Fails to Entice Investors

Abdul Rehman
6 Feb 2024 · 2 minutes read

Oracle Corp (ORCL:US) shares fell on Tuesday after the tech company reported a mixed set of results for its first quarter, as well as offered softer-than-expected guidance for its key cloud segment.

The stock was down around 12% on Tuesday.

Oracle said it secured  $1.19 in earnings per share in FQ1, beating the consensus for earnings of $1.15 per share. For this quarter, the company sees EPS rising to $1.29, again better than the consensus of $1.25.

Revenue rose nearly 9% to $12.45 billion, in line with the analyst consensus. The company sees total Q2 revenue jumping 6% (up or down 1%), while analysts were looking for slightly higher growth.

Moreover, Oracle’s +28% YoY growth outlook for its cloud segment was below the +29% growth reported for the first quarter. Oracle blamed the weaker outlook on the accelerated transition of Cerner to the cloud.

"Is Generative AI the most important new computer technology ever? Maybe!," said Oracle Chairman and CTO, Larry Ellison. 

"Self-driving cars, molecular drug design, voice user interfaces—billions of dollars are being invested in AI. As of today, AI development companies have signed contracts to purchase more than $4 billion of capacity in Oracle's Gen2 Cloud. That's twice as much as we had booked at the end of Q4.”

While AI commentary will likely be seen as a positive by investors, it is likely that they were looking for more as Oracle is perceived as one of the key GenAI beneficiaries. 

Several Congress members, including Michael Guest, Ro Khanna, and Josh Gottheimer, were trading ORCL shares this year. Buyers have been rewarded in 2023 as the stock is up more than 33% YTD.