What to look for in Oracle’s Q3 earnings
On Tuesday, Oracle will announce its third-quarter earnings, and all eyes are on the company’s massive AI data center build-out. Last month, the company told investors that it plans to raise $45 billion to $50 billion to fund its ambitious capex plans.
With so much new spending, the company is reportedly looking to make steep job cuts — thousands of positions across the company — and may be freezing hiring in its cloud division.
Shares of Oracle are down by more than 20% since the start of the year. The stock is down about 56% from its 52-week high of $345.72.
The company’s big bet on AI is causing some concerns among investors, and Oracle has recently seen a wave of lowered price targets from analysts:
Jefferies: to $320 from $400.
Scotiabank: to $215 from $220.
Deutsche Bank: to $300 from $375.
Baird: to $200 from $300.
On Friday, shares dropped sharply on reports that OpenAI had pulled out of a planned expansion of the Stargate data center in Abilene, Texas. But OpenAI has since clarified that the decision to back out of plans for the expansion was just the result of shifting capacity to other data center sites under construction.
The company will announce its earnings after market close on Tuesday.
FactSet’s survey of analysts shows they expect earnings per share of $1.70 and revenue of $16.9 billion for Oracle’s third quarter. Cloud revenue is expected to be $8.76 billion, and all eyes will be on Oracle’s capex, which is expected to be $14 billion.
