Oracle shares dropped 10% this week following disappointing results in its quarterly financial results – contributing to ever-present fears about an AI bubble.
On Thursday, Oracle’s shares plunged following weaker-than-expected revenue of $16.1B for the three months to November – shy of the $16.2B analysts had projected, according to the BBC. Let’s take a look at what this means.
Trouble With OpenAI Partnership
Oracle had earlier this year joined the artificial intelligence race with a $300B OpenAI deal, somewhat tying its fate to that of the ChatGPT creator. But OpenAI has been having its own problems, with CEO Sam Altman declaring a “code red” at the company amid fierce competition from Google’s Gemini 3.
Salesforce CEO Marc Benioff has recently said that he would no longer use ChatGPT, favoring Google’s alternative. This jibe might be best taken with a pinch of salt, of course, coming not that long after Altman took a swipe at Slack, suggesting that the world needs an “AI-native platform” that will eventually replace Slack – which he said creates a kind of “fake work”.
Oracle chairman and chief technology officer Larry Ellison issued a statement on Wednesday, writing: “There are going to be a lot of changes in AI technology over the next few years, and we must remain agile in response to those changes.”
He added: “We will continue to buy the latest GPUs from Nvidia, but we need to be prepared and able to deploy whatever chips our customers want to buy.”
Emarketer analyst Jacob Bourne said Oracle’s earnings arrived as investors “weigh whether its massive OpenAI partnership might mean overexposure” with a customer that is in the spotlight over concerns about profitability. He added that Oracle faces rising scrutiny over the debt it has amassed to fund building data centers.
Oracle is managing a debt pile, with long-term debt surging by 25% over the past year to $99.9B, according to The Guardian, and reports have suggested that investors have been spooked by Oracle raising forecasts for its AI investments.
Oracle’s Fiscal Year 2026 Second Quarter Financial Results include the following metrics:
- Q2 Remaining Performance Obligations $523B, up 438% in USD
- Q2 GAAP Earnings per Share up 91% to $2.10, Non-GAAP Earnings per Share up 54% to $2.26
- Q2 Total Revenue $16.1B, up 14% in USD and up 13% in constant currency
- Q2 Cloud Revenue (IaaS plus SaaS) $8.0B, up 34% in USD and up 33% in constant currency
- Q2 Cloud Infrastructure (IaaS) Revenue $4.1B, up 68% in USD and up 66% in constant currency
- Q2 Cloud Application (SaaS) Revenue $3.9B, up 11% in both USD and constant currency
- Q2 Fusion Cloud ERP (SaaS) Revenue $1.1B, up 18% in USD and up 17% in constant currency
- Q2 NetSuite Cloud ERP (SaaS) Revenue $1.0B, up 13% in both USD and constant currency
Ipek Ozkardeskaya, a senior analyst at Swissquote, said: “Frankly, the report was not dramatically bad, but it came to confirm concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation.”
Final Thoughts
When tech giants report quarterly results, the world takes notice – now more than ever, with artificial intelligence coming to dominate the business world and cultural zeitgeist.
When the slightest wobbles can have enormous implications, it would benefit us all to stay on top of what’s happening with Silicon Valley titans – especially those of us in the Salesforce ecosystem.
