Oracle (ORCL) stock is moving lower out of the gate Tuesday after the cloud infrastructure platform came up short of top- and bottom-line expectations for its fiscal 2025 second quarter.
In the three months ending November 30, Oracle's revenue increased 8.6% year over year to $14.06 billion, boosted in part by a 12.1% surge in its cloud services and license support segment to $10.8 billion. Its earnings per share (EPS) were up 9.7% from the year-ago period to $1.47.
"Record level artificial intelligence (AI) demand drove Oracle Cloud Infrastructure revenue up 52% in Q2, a much higher growth rate than any of our hyperscale cloud infrastructure competitors," said Oracle CEO Safra Catz in a statement. "Growth in the AI segment of our Infrastructure business was extraordinary – GPU consumption was up 336% in the quarter – and we delivered the world's largest and fastest AI SuperComputer scaling up to 65,000 Nvidia H200 GPUs."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Still, the results missed analysts' expectations. Wall Street was anticipating revenue of $14.1 billion and earnings of $1.48 per share, according to CNBC.
"For fiscal year 2025, we remain very confident and committed to full year total revenue growing double digit and full year total cloud infrastructure growing faster than the 50% reported last year," Catz said on Oracle's conference call.
He added that the company anticipates fiscal third-quarter revenue growth of 7% to 9%, or approximately $14.3 billion at the midpoint, and earnings per share of $1.50 to $1.54. Analysts, meanwhile, are expecting revenue of $14.65 billion and earnings of $1.57 per share.
The company also declared a quarterly dividend of 40 cents per share, payable on January 23 to shareholders of record at the close of business on January 9.
Is Oracle stock a buy, sell or hold?
Oracle shares were up nearly 83% for the year to date on a total return basis (price change plus dividends) through the December 9 close. Unsurprisingly, Wall Street is bullish on the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for the large-cap stock is $192.61, representing implied upside of roughly 10% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm UBS Global Research is one of those with a Buy rating on Oracle and raised its price target to $210 from $200 despite the earnings miss.
While Oracle shares are "cooling off" after earnings, "likely due to the lack of material fiscal second-quarter upside, a continued solid tone on the coming fiscal Q3 and Q4 quarters leaves the core growth acceleration thesis intact," says UBS Global Research analyst Karl Keirstead.
Related Content
-
Is Trump's Tax Plan Speeding Up the Looming Social Security Funding Crisis?Social Security Social Security's combined retirement funds are running out of cash, and its insolvency date is expected to occur in less than a decade.
-
How to Keep Your Work Friends After You RetireWork friendships can boost teamwork, lift your spirits, and make the job more fun. But when you retire, these friendships can fade. Here's a look at why that happens and what you can do about it.
-
DexCom, GE, SLB: Why Experts Rate These Stocks at Strong BuyWall Street gives these three diverse names Strong Buy recommendations with high potential upside.
-
Here's Why Munis Aren't Just for Wealthy Investors NowBuyers of all levels should be intrigued by municipal bonds' steep yield curve, strong credit fundamentals and yield levels offering an income buffer.
-
Stocks Edge Higher With Nvidia, Fed in Focus: Stock Market TodayThe AI bellwether reports earnings after today's close, while Wall Street is keeping a cautious eye on President Trump's attacks against the Fed.
-
The Smart Way to Retire: 13 Habits to Steal From the WealthyCheck out these practical strategies that anyone can adopt, not just the rich, and get closer to achieving your retirement dreams.
-
Are There Opportunities to Invest in China?Opportunities to invest in China are plentiful and, arguably, shouldn't be ignored in the U.S. Here's where to look.
-
Coulda, Woulda, Shoulda: Are These 5 Stocks Too Overvalued to Buy Now?Investors worried about missing the boat on overvalued stocks need not fret. These five names, while expensive, are still seeing lots of love from analysts.
-
I'm a Financial Planning Pro: Do Your Family a Final Favor and Write Them a Love LetterSpecify your preferences in this personal document that shares your wishes on how you want to be remembered and celebrated. Your family will thank you for easing an emotional time.
-
The Future of Financial Advice Is Human: Gen Z Trusts Advisers, But AI Skills MatterGraduates entering the workforce trust human advisers more than AI tools with their financial planning. But AI can still enhance the client/adviser relationship.
