Oracle misses AI cloud contract estimates, shares slide 

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Dec 10 : Oracle missed a slew of Wall Street estimates for sales, operating profit and future cloud-computing contract growth, 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 were down 7 per cent in extended trading.

Oracle reported total revenue of $16.06 billion for the second quarter, compared with analysts' average estimate of $16.21 billion, according to data compiled by LSEG. Adjusted operating income of $6.7 billion also missed Wall Street's average target of $6.8 billion, according to LSEG data.

"Although Oracle's shares are buoyed by its September surge, this revenue miss will likely exacerbate concerns among already cautious investors about its OpenAI deal and its aggressive AI spending," eMarketer analyst Jacob Bourne said in a statement.

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Oracle's closely watched metric for future cloud contracts also missed Wall Street estimates.

Oracle also reported $523 billion in future contracts, up 14.94 per cent from the $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. But the $523 billion figure fell below analyst estimates of $526 billion, according to Visible Alpha data. 

Oracle posted quarterly adjusted profit of $2.26 per share, above analyst estimates of $1.64, according to LSEG data. However, Oracle said both adjusted and unadjusted profits were higher on a one-time $2.7 billion pretax gain on selling its stake in chip designer Ampere Computing.

Larry Ellison, Oracle chairman, said the firm chose to sell its shares in Ampere 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 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.

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