Oracle Reports Q3 Revenue Below Forecast Amid AI Investment and Market Concerns
Oracle reported third-quarter revenue of $16.1 billion for the three months ending in November, slightly below analysts' forecast of $16.2 billion. Despite this, the company experienced a 14% year-over-year revenue growth, with Oracle Cloud Infrastructure AI infrastructure sales rising by 68%. Shares fell 14% following the earnings report, adding to a 40% decline from their three-month peak, though shares remain over 30% higher since the start of the year.
In September, Oracle signed a $300 billion deal with OpenAI to supply compute resources over five years, an announcement that briefly made Larry Ellison the world's richest man. Ellison also warned about potential changes in AI technology and reaffirmed Oracle's chip neutrality policy, stating the company will purchase GPUs from Nvidia but deploy whichever chips customers prefer.
Following Oracle's results, shares of Nvidia and AMD declined by more than 3.5% and around 4% respectively, reflecting a broader weakness in AI-related market sentiment. Investors expressed concerns about circular financing and exposure from Oracle's partnership with OpenAI, especially given the company's elevated debt levels after raising a record $18 billion in bonds in September to fund data center expansion.
Analysts noted both the accelerating 14% revenue growth and cautious sentiment surrounding AI valuations. The ongoing scrutiny of Oracle's AI spending and the OpenAI deal highlights investor wariness toward the company's debt load and the evolving dynamics of AI infrastructure investments.
