ii view: why Oracle stock slumped after latest results
If processing data is now key in the modern world, does this long-established database software provider have a clear advantage? Analyst Keith Bowman assesses prospects.
11th December 2025 11:32
by Keith Bowman from interactive investor
Second-quarter results to 30 November
- Revenue up 14% to $16.06 billion
- Adjusted earnings up 54% to $2.26 per share
Chief executive Clay Magouyrk said:
“Oracle is very good at building and running high-performance and cost-efficient cloud
Datacentres. For years Oracle has been investing in AI and building autonomous cloud software.”
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ii round-up:
Oracle Corp (NYSE:ORCL) has detailed sales that missed Wall Street expectations, with the database and operator of data centres to host other company's AI software also increasing its full-year investment forecasts.
Sales in the second quarter to late November rose 14% to $16.06 billion, compared with analyst estimates of $16.2 billion. The Texas headquartered company now expects to spend $50 billion during the financial year to late May building new data centres, up from a forecast in September of $35 billion.
Shares in the tech giant fell around 11% in post results trading having come into these latest numbers up by just over a third so far in 2025. That’s similar to NVIDIA Corp (NASDAQ:NVDA) whose high-performance chips are used to process AI related software. The tech-heavy Nasdaq Composite index is up by just over a fifth year to date.
Adjusted earnings for the quarter soared 54% to $2.26 per share, surpassing analyst estimates of around $1.65 per share.
Oracle outlined a strategy to allow customers of its data centres to use chips made by the company of their choice within the respective datacentre, potentially allowing cheaper options to be used.
Oracle previously sold a $6.5 billion share stake in chip designer Ampere, which helped to boost earnings during this latest quarter.
Oracle’s Remaining Performance Obligations (RPO), a measure of contracted revenue that has not yet been recognised, rose by $67.7 billion from the previous quarter to a total $523 billion, boosted by deals with companies including Facebook owner Meta.
Oracle expects revenues for the current third quarter to rise by around 19%, pushing adjusted earnings of between $1.70 and $1.74 per share. Wall Street is currently forecasting adjusted earnings of $1.72 per share.
Third-quarter results are likely to be announced mid-March.
ii view:
Started in 1977, Oracle pioneered the first Structured Query Language (SQL) database. Data hosting, or cloud related revenues, made up half of all sales during this latest quarter. Software sales totalled 36%, with hardware provision 5% and other services totalling 9%. Oracle’s more than 400,000 customers include Airbnb Inc Ordinary Shares - Class A (NASDAQ:ABNB), Deutsche Bank, the London Stock Exchange Group (LSE:LSEG) and Waitrose.
For investors, expected full-year capital expenditure of $50 billion is up from a previous estimate of $21 billion and now needs to be justified by returns and profit growth. High competition includes players such as International Business Machines Corp (NYSE:IBM) and Google owner Alphabet Inc Class A (NASDAQ:GOOGL). A forecast price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while a forecast dividend yield of under 1% compares to an expected yield of over 2% at IBM.
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On the upside, an RPO of $523 billion now underpins future revenues, with Oracle’s renowned database a major attraction for customers in hosting their AI software at Oracle facilities. A partnership with the US government has begun as part of previously announced plans by Donald Trump to invest billions of dollars in AI infrastructure across the US. A wide diversity of both customer types and geographical location exists, while growth by acquisition over time has been successfully achieved.
For now, and despite ongoing risks and concerns about an AI bubble, Oracle’s ambition to be one of the world’s largest cloud infrastructure, or hosting companies is arguably underpinned by its much-used database software. As such, Oracle stock is likely to be closely watched by investors.
Positives:
- Product and customer sector diversity
- Successful acquisition track record
Negatives:
- Society concerns for AI use
- Currency moves can impact
The average rating of stock market analysts:
Buy
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