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Key Takeaways
- Oracle led tech stocks lower Thursday after the cloud computing provider’s quarterly sales missed analysts’ estimates.
- New commitments from AI heavyweights Nvidia and Meta failed to offset the revenue miss, and resolve concerns about Oracle’s reliance on a few big clients.
Oracle’s (ORCL) stock tumbled Thursday, dragging other tech stocks down along with it, a day after the cloud computing giant posted sales that missed analysts’ estimates.
Oracle said new agreements with AI heavyweights Meta Platforms (META) and Nvidia (NVDA) helped grow its backlog to a record $523 billion, though that failed to sway investors from selling off Thursday amid persistent worries about circular AI deals and the company’s reliance on a few large customers.
Shares of Oracle were down nearly 14% in recent trading. AI hardware makers Advanced Micro Devices (AMD), Micron Technology (MU), and Broadcom (AVGO)—which is set to report earnings after the closing bell today—also lost ground.
Why This Matters to Investors
Oracle shares rallied to a record high following its earnings report in September, but the stock has given up those gains in the months since amid growing worries about an AI bubble. Oracle’s stock plunge Thursday despite a record backlog and pressure on other AI-exposed stocks could be taken as a signal of weakening confidence in the AI trade.
Still, most Wall Street analysts say they’re standing by Oracle’s stock. Though ratings are still in flux, a majority of the 12 analysts with current ratings compiled by Visible Alpha consider the stock a “buy” with just three neutral ratings and one analyst advising selling the stock.
William Blair analysts wrote following the report that while they expect Oracle’s stock could be limited in the near term by debt concerns and spending plans, they believe its buildout “will pave the way for significant earnings growth in the years to come.”
