Oracle had a tough time last quarter. Sales of its cloud services were not as good as expected and the outlook for the future does not look promising. This caused Oracle shares to drop 9% during pre-market trading.
The part of Oracle’s business that deals with cloud infrastructure (the technology behind services like Amazon Web Services and Microsoft Azure) has not grown as quickly as it once did. Investors are concerned because this is a big part of Oracle’s plans for the future.
Even though Oracle stock is up 40% this year, some people are now unsure. Oracle, co-founded by billionaire Larry Ellison, has been spending heavily to build data centers, aiming to become a major player in cloud services.
Oracle explained that the weak results were due to problems obtaining enough supplies. CEO Safra Catz mentioned that there is a high demand for Oracle’s services in generative artificial intelligence and cloud infrastructure.
However, this did not alleviate analysts’ concerns. At least four groups that study the stock market lowered their expectations for Oracle stock after seeing the results.
Overall revenue from Oracle’s cloud services, which includes software, increased 25% in the latest quarter. But this was less than the company expected, below projected growth of 29% to 31%.
Oracle attributed these challenges to factors such as companies spending less and facing tough competition. Looking ahead, Oracle predicted its revenue in the next quarter would grow between 6% and 8%, including health data software platform Cerner.
This prediction did not match what analysts expected, raising concerns about Oracle’s ability to continue growing in a competitive market. In short, Oracle is dealing with investor concerns due to not-so-good cloud sales, an uncertain future, and tough competition in the cloud services industry.
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