Oracle misses, stock down
Corporate software giant and aspiring AI big shot Oracle is down big Tuesday after reporting quarterly numbers last night that underwhelmed on virtually all fronts.
It missed on adjusted earnings per share (realizing $1.47 vs. expectations for $1.49) and the top line was soft at $14.13 billion compared to expectations for $14.40.
It also cut its guidance for its fiscal Q4, undershooting Wall Street expectations for earnings per share.
There was some good news in the report, as Oracle touted the fact its sales backlog — which it calls its “remaining performance obligations,” or RPO — hit $130 billion, driven by a $48 billion increase in fiscal Q3, suggesting surging demand for the company’s cloud computing services.
But in a note on Oracle’s results, Morgan Stanley analysts wrote that investor attitudes toward building big databases in the coming years to train AI have changed.
“An RPO performance like that seen in Oracle’s FY3Q25 would have likely driven a much more positive stock reaction 6 to 12 months ago, but rising concerns on the durability of training revenues (the scaling laws debate), margin impacts of a rising contribution [from Oracle’s cloud business], and a market backdrop less willing to accept those risks, leaves investors with more questions than answers.”
It also cut its guidance for its fiscal Q4, undershooting Wall Street expectations for earnings per share.
There was some good news in the report, as Oracle touted the fact its sales backlog — which it calls its “remaining performance obligations,” or RPO — hit $130 billion, driven by a $48 billion increase in fiscal Q3, suggesting surging demand for the company’s cloud computing services.
But in a note on Oracle’s results, Morgan Stanley analysts wrote that investor attitudes toward building big databases in the coming years to train AI have changed.
“An RPO performance like that seen in Oracle’s FY3Q25 would have likely driven a much more positive stock reaction 6 to 12 months ago, but rising concerns on the durability of training revenues (the scaling laws debate), margin impacts of a rising contribution [from Oracle’s cloud business], and a market backdrop less willing to accept those risks, leaves investors with more questions than answers.”
