"Oracle Corp. shares fell 11% in early trading after the company reported a jump in spending on AI data centers and other equipment, rising outlays that are taking longer to translate into cloud revenue than investors want. Fiscal second-quarter cloud sales increased 34% to $7.98 billion, while revenue in the company's closely watched infrastructure business gained 68% to $4.08 billion. Both numbers fell just short of analysts' estimates."
"Remaining performance obligation, a measure of bookings, jumped more than fivefold to $523 billion in the quarter, which ended Nov. 30, the company said Wednesday in a statement. Analysts, on average, estimated $519 billion, according to data compiled by Bloomberg. Still, Wall Street has raised doubts about the costs and time required to develop AI infrastructure at such a massive scale. Oracle has taken out significant sums of debt and committed to leasing multiple data center sites."
Shares dropped 11% after a surge in AI data-center and equipment spending that is not yet translating into expected cloud revenue. Fiscal second-quarter cloud sales rose 34% to $7.98 billion and infrastructure revenue climbed 68% to $4.08 billion, both slightly below estimates. Remaining performance obligation jumped over fivefold to $523 billion versus estimates of $519 billion. Oracle is building large data centers to support AI work for OpenAI and serves customers like TikTok and Meta. Capital expenditures reached about $12 billion, up from $8.5 billion, prompting investor concern over debt-fueled expansion and timing of revenue conversion.
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