By Oracle shares plunged more than 10% on Tuesday after the company reported weaker-than-expected quarterly revenue and forecast slower growth for the current quarter.
The company’s cloud computing business, which has been a key growth driver in recent years, slowed to 5% growth in the first quarter, below analysts’ expectations of 8%. Oracle also forecast cloud revenue growth of 4% to 5% for the second quarter, below the consensus estimate of 6%.
The weak forecast was blamed on a number of factors, including strong competition from rivals such as Amazon Web Services, Microsoft Azure, and Google Cloud. Oracle is also facing headwinds from a slowdown in digital spending by businesses, as they become more cautious about spending in the face of rising inflation and economic uncertainty.
CEO Safra Catz said that Oracle is “still early in our cloud journey” and that the company is “investing heavily” to grow its cloud business. However, she acknowledged that the company is facing “tough competition” in the cloud market.
The weak forecast sent Oracle shares tumbling, wiping out more than $30 billion in market value. The stock is now down about 15% from its all-time high set in March.
Analysts were mixed on the outlook for Oracle. Some analysts believe that the company’s cloud business is still growing, albeit at a slower pace. Others believe that the company is facing increasing competition and that its growth prospects are limited.
Overall, the weak forecast from Oracle is a sign that the company is facing challenges in the cloud market. Oracle will need to invest heavily and innovate in order to compete with rivals and regain growth momentum.
Here are some additional details that could be added to the article:
- Oracle’s cloud computing business is still relatively small compared to rivals such as Amazon Web Services and Microsoft Azure. In the first quarter, Oracle’s cloud revenue was $7.6 billion, compared to $55.4 billion for Amazon Web Services and $22.1 billion for Microsoft Azure.
- Oracle is facing increasing competition from smaller, more nimble cloud providers such as Snowflake and Databricks. These providers are focused on specific areas of the cloud market, such as data warehousing and machine learning, where they have a competitive advantage over Oracle.
- Oracle is also facing headwinds from the economic slowdown. Businesses are becoming more cautious about spending, and this is likely to have a negative impact on Oracle’s cloud business.
Despite the challenges, Oracle remains a major player in the cloud computing market. The company has a strong track record of innovation, and it is investing heavily in its cloud business. If Oracle can execute on its plans, it could still achieve long-term growth.
