Oracle (ORCL) stock is moving lower out of the gate Tuesday after the cloud infrastructure platform came up short of top- and bottom-line expectations for its fiscal 2025 second quarter.
In the three months ending November 30, Oracle's revenue increased 8.6% year over year to $14.06 billion, boosted in part by a 12.1% surge in its cloud services and license support segment to $10.8 billion. Its earnings per share (EPS) were up 9.7% from the year-ago period to $1.47.
"Record level artificial intelligence (AI) demand drove Oracle Cloud Infrastructure revenue up 52% in Q2, a much higher growth rate than any of our hyperscale cloud infrastructure competitors," said Oracle CEO Safra Catz in a statement. "Growth in the AI segment of our Infrastructure business was extraordinary – GPU consumption was up 336% in the quarter – and we delivered the world's largest and fastest AI SuperComputer scaling up to 65,000 Nvidia H200 GPUs."
Still, the results missed analysts' expectations. Wall Street was anticipating revenue of $14.1 billion and earnings of $1.48 per share, according to CNBC.
"For fiscal year 2025, we remain very confident and committed to full year total revenue growing double digit and full year total cloud infrastructure growing faster than the 50% reported last year," Catz said on Oracle's conference call.
He added that the company anticipates fiscal third-quarter revenue growth of 7% to 9%, or approximately $14.3 billion at the midpoint, and earnings per share of $1.50 to $1.54. Analysts, meanwhile, are expecting revenue of $14.65 billion and earnings of $1.57 per share.
The company also declared a quarterly dividend of 40 cents per share, payable on January 23 to shareholders of record at the close of business on January 9.
Is Oracle stock a buy, sell or hold?
Oracle shares were up nearly 83% for the year to date on a total return basis (price change plus dividends) through the December 9 close. Unsurprisingly, Wall Street is bullish on the tech stock.
According to S&P Global Market Intelligence, the average analyst target price for the large-cap stock is $192.61, representing implied upside of roughly 10% to current levels. Additionally, the consensus recommendation is Buy.
Financial services firm UBS Global Research is one of those with a Buy rating on Oracle and raised its price target to $210 from $200 despite the earnings miss.
While Oracle shares are "cooling off" after earnings, "likely due to the lack of material fiscal second-quarter upside, a continued solid tone on the coming fiscal Q3 and Q4 quarters leaves the core growth acceleration thesis intact," says UBS Global Research analyst Karl Keirstead.
