"Shares in the company fell by 11.5% overnight after it reported a lower-than-expected 14% rise in revenues to $16bn (12bn) in the latest quarter while revealing it was boosting its AI spending by about $15bn. The business posted weaker-than-expected quarterly revenues for the three months to the end of November, as sales at its cloud computing business grew at a slower pace than forecast at 34%."
"At the same time, investors were spooked by Oracle raising forecasts for investment in AI. It expects capital expenditure to jump by 40% to $50bn, with the bulk of the increase aimed at building datacentres. The company is already managing a growing debt pile, with Oracle's long-term debt having surged 25% over the past 12 months to $99.9bn."
"Frankly, the report was not dramatically bad, but it came to confirm concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation, Ipek Ozkardeskaya, a senior analyst at Swissquote said. Continued optimism about the potential for AI technology has led to a leap in company valuations in recent months, but there has been a growing spate of warnings from policymakers and business leaders."
Oracle reported a 14% revenue increase to $16bn in the latest quarter and announced a roughly $15bn rise in AI spending. Shares fell 11.5% as cloud computing revenue growth slowed to 34% and infrastructure revenue grew 68%, both below expectations. The firm plans capital expenditure to increase 40% to $50bn, mainly for datacentres. Long-term debt rose 25% to $99.9bn over the past year. Analysts expressed concern that heavy AI spending financed by debt has an uncertain timeline for revenue generation. Rising optimism about AI valuations has prompted warnings about a potential market correction.
Read at www.theguardian.com
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