Oracle (ORCL) stock fell more than 10% after the bell Wednesday as its quarterly revenue fell below Wall Street’s expectations.
Oracle reported revenue of $16.06 billion for its fiscal second quarter, up 14% from the previous year but lower than the $16.21 billion projected by analysts tracked by Bloomberg. The tech firm’s closely watched AI segment, Oracle Cloud Infrastructure (OCI), saw a 68% climb in revenue to $4.1 billion, roughly in line with analyst estimates.
Meanwhile, Oracle’s earnings per share of $2.26 surpassed the $1.64 projected by the Street, marking a jump from EPS of $1.47 in the year-ago period.
The company’s AI-fueled RPO, or remaining performance obligations — a measure of future revenue from customer contracts — soared nearly 440% from the prior year and 15% from the first quarter to $523 billion for the three months ended Nov. 30. Oracle principal financial officer Doug Kehring said in a press release that the jump was driven by new commitments from Meta (META), Nvidia (NVDA), and other customers.
Investors had been closely watching the cloud firm’s results for any signs of cracks in the AI bubble. Oracle shares have plummeted more than 30% from their September peak as the company’s mounting debt and heavy reliance upon OpenAI (OPAI.PVT) to reach its ambitious revenue targets put investors on edge.
Oracle stock had peaked this fall as Wall Street applauded the company’s massive RPO of $455 billion in the first quarter, driven by a $300 billion deal with OpenAI (OPAI.PVT).
The company has featured in the broader fears over an artificial intelligence bubble, as investors grow concerned over the increasing use of debt to fund tech firms’ data center projects, as well as the entanglement of companies participating in the AI boom through multibillion-dollar circular financing arrangements.
Earlier this month, the cost of insuring Oracle’s debt against default, as measured by its credit default swap pricing, climbed to its highest level since 2009, according to Intercontinental Exchange (ICE) data shared with Yahoo Finance.
