- Quarterly revenue grew 14% year-over-year, but shares fall 11-12% on bad news
- The company expects to spend $15 billion more, largely due to AI
- Meta, Nvidia and OpenAI are all major Oracle customers
Despite a clear drive for AI innovation, investors were clearly not happy with Oracle’s higher-than-expected AI spending, with shares falling as much as 11-12% following the announcement.
Higher capital expenditures and the company’s missing estimates on sales and earnings forecasts ultimately led to a drop in share prices following Oracle’s second-quarter earnings call.
Only halfway through the year and the company has had to adjust its Capex quite significantly – $15 billion more in fact.
Oracle spends more than planned
Investor discontent comes despite the company posting a healthy 14% rise in quarterly revenue, to $16.1 billion.
Speaking about revised spending expectations, chairman Larry Ellison noted: “There will be a lot of changes in AI technology over the next few years, and we need to remain agile in response to those changes.”
Oracle’s growth expectations are driven by Meta and Nvidia commitments, which will help diversify the company’s portfolio, which currently includes a $300 billion five-year deal with OpenAI.
The cloud computing company was also hit with $406 million in restructuring costs – 387% more than it faced this time last year. 2025 has seen several series of smaller layoffs at the company, but Oracle has a $1.6 billion restructuring plan for this fiscal year, so additional spending will continue to roll in under that.
Reassuring investors, Clay Magouyrk reminded us that “Oracle has over 211 live and planned regions worldwide – more than any of our cloud competitors.”
Still, Oracle shares are up 18.9% year-to-date, despite being lower than the mid-September high.
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