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What’s happening: Shares of Oracle fell sharply on Tuesday, after the company reported its fiscal second-quarter results.
What happened: Although the database software company reported strong results for the quarter, they fell short of elevated expectations.
Oracle announced its third-quarter guidance short of expectations but reaffirmed its annual guidance.
How were the results: The Austin, Texas-based company reported a miss in both sales and earnings for the latest quarter.
Why it matters: OCI (Oracle Cloud Infrastructure) is the company’s biggest revenue driver. However, this is the space where Oracle competes with the biggest tech companies, including Amazon, Microsoft, and Google.
“Oracle Cloud Infrastructure trains several of the world’s most important generative AI models because we are faster and less expensive than other clouds,” Oracle founder Larry Ellison said.
Oracle’s total cloud revenues climbed 24% year-over-year to $5.9 billion. Cloud services and license support revenues rose 12% to $10.8 billion, while Cloud license and on-premise revenues gained 1% year-over-year to $1.2 billion.
Sales from the company’s cloud infrastructure business surged 52% to $2.4 billion in the quarter. CEO Safra Catz said that sales were driven by “record level AI demand.”
Although Oracle’s RPOs (remaining performance obligations), which is a measure of bookings, came in at an impressive $97 billion, it represented a decline from the previous quarter’s $99.1 billion.
Management guided to revenue growth of 9%-11% for the fiscal third quarter, short of consensus estimates of 10%. They projected adjusted earnings of $1.50 to $1.54 per share, lower than market expectations of $1.57 per share.
How shares responded: Oracle’s shares fell 6.7% to settle at $177.74 on Tuesday. Some of the decline was on profit taking, with the company’s stock having added around 71% year to date.
What to watch: Investors will continue monitoring stiff competition in the cloud business. Investments in AI, which drives cloud demand, will also be in focus.
Context: Crude oil settled higher on Tuesday, recording gains for the second consecutive session.
Details: Crude oil prices started the week on a positive note, after China announced its first move in 14 years towards easing its overall monetary policy. Syrian President Bashar al-Assad’s sudden fall also provided a boost to oil prices.
Some strength in the US dollar limited the overall gains for crude oil. This is because a higher greenback makes commodities more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.3% on Tuesday.
WTI crude oil for January delivery rose 0.3% to close at $68.59 per barrel on Tuesday, while February Brent crude added around 0.1% to $72.19 a barrel.
In other energy trading, January gasoline gained 0.2% to $1.96 a gallon, while January heating oil rose 0.1% to $2.19 a gallon on Tuesday. Natural gas for January delivery bucked the trend and fell 0.6% to $3.16 per million British thermal units.
What to watch: Investors await the release of the Energy Information Administration’s data on crude oil stockpiles today. Crude oil inventories in the US, which declined by 5.073 million barrels in the week ended November 29, are expected to contract by 1.3 million barrels in the recent week.
Analysts expect gasoline stockpiles to decline by 0.2 million barrels in the latest week, compared to 2.36 million barrels in the previous week. Distillate inventories are projected to rise by 0.9 million barrels, compared to 3.383 million barrels in the previous week.
Data on US inflation rate will also remain in focus, as higher inflation exerts pressure on oil demand. Analysts expect inflation rate in the US to accelerate to 2.7% year-over-year in November, from 2.6% in the previous month.
Other Markets: European indices closed lower on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.86%, 0.08%, 1.14% and 0.52%, respectively.
The EU Council announced that Ukraine will soon receive €4.2 billion following the approval by the European Union’s member states. The news sent the RUB/USD pair lower in forex trading this morning.
Japan’s business survey index for big manufacturing firms climbed to 6.3% in the fourth quarter, accelerating from 4.5% in the previous quarter. Business sentiment surging to the strongest level since the fourth quarter of 2021 lent support to the JPY/USD forex pair.
Philippines received $0.37 billion in net foreign direct investments in September. The figure declining by 36.2% year-over-year sent the PHP/USD pair lower in forex trading this morning.
South Korea’s unemployment rate came in unchanged at 2.7% in November, lending support to the KRW/USD forex pair.
Mexico’s consumer confidence indicator fell to 47.7 in November, from 49.5 in the previous month, sending the MXN/USD pair lower in forex trading this morning.
South Africa’s retail sales (1500 UAE Time), India’s M3 money supply (1530 UAE Time), US MBA Mortgage Applications (1600 UAE Time) and monthly budget statement (2300 UAE Time), Brazil’s car production (1700 UAE Time) and new car registrations (1700 UAE Time), Brazil’s business confidence (1800 UAE Time), Bank of Canada’s interest rate decision (1845 UAE Time), Russia’s inflation rate (2000 UAE Time), as well as Argentina’s inflation rate (2300 UAE Time).
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