By Juby Babu and Stephen Nellis
Dec 10 (Reuters) – Oracle missed Wall Street estimates for second-quarter revenue and operating profit on Wednesday, a sign that corporate spending on its cloud services may be cooling amid broader concerns of a bubble in the artificial intelligence market.
Shares of the Austin, Texas-based company fell 5.5% in extended trading.
Oracle posted quarterly adjusted profit of $2.26 per share, above analyst estimates of $1.64, according to LSEG data. However, Oracle said both adjusted and unadjusted profits were higher on a one-time $2.7 billion pretax gain on selling its stake in chip designer Ampere Computing.
Adjusted operating income of $6.7 billion missed Wall Street’s average target of $6.8 billion, according to LSEG data.
Larry Ellison, Oracle chairman, said the firm chose to sell its shares because it plans to have a policy of neutrality about which chips it uses in its data centers and that “we no longer think it is strategic for us to continue designing, manufacturing and using our own chips in our cloud datacenters.”
Ellison said that Oracle would continue to buy Nvidia’s latest chips, but that “we need to be prepared and able to deploy whatever chips our customers want to buy.”
Oracle also reported $523 billion in future contracts, up 14.94% from the $455 billion it reported in September, when it revealed a slew of cloud computing deals with ChatGPT creator OpenAI and others that sent its shares skyrocketing.
Oracle is building massive data centers for OpenAI, which Reuters has reported is working with Broadcom to develop its own custom AI chip.
Shares of Nvidia and Broadcom were both down less than 1% after Oracle’s results.
Oracle reported total revenue of $16.06 billion for the second quarter, compared with analysts’ average estimate of $16.21 billion, according to data compiled by LSEG.
(Reporting by Juby Babu in Mexico City and Stephen Nellis in San Francisco; Editing by Maju Samuel and Matthew Lewis)
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