Oracle's stock price experiences its worst day of 2024 following an earnings miss.

• On Tuesday, Oracle shares experienced their sharpest decline in a year after the company released its disappointing earnings report.
• Oracle also issued a weaker-than-expected forecast.
• Since 1999, the stock has experienced its best year with a 68% increase in value by 2024.

On Tuesday, the shares of the database software vendor dropped by 8%, and they were on track for their biggest decline in a year after their earnings report disappointed investors.

Despite a 5.4% decline in May, the stock's best annual performance since the dot-com boom of 1999 is still a 68% increase in 2021.

Oracle reported earnings per share for the fiscal second quarter of $1.47, which was a penny below analysts' average estimate, according to LSEG. Additionally, revenue increased by 9% from the previous year to $14.06 billion, but fell short of the $14.1 billion average estimate.

Oracle's net income increased by 26% to $3.15 billion, or $1.10 a share, from $2.5 billion, or 89 cents a share, in the previous year. Additionally, the company's cloud services business experienced a 12% increase in revenue from the previous year, accounting for 77% of the total revenue.

"Analysts at KeyBank Capital Markets expressed some concerns about a stock that has set high expectations for itself after a report on Monday. Despite this, they still recommend buying the stock and remain optimistic about its future prospects."

Oracle anticipates revenue growth of 7% to 9% this quarter, with the midpoint being approximately $14.3 billion. Analysts had predicted sales of $14.65 billion, while the company expects adjusted earnings of $1.50 to $1.54 per share. Analysts had forecast earnings per share of $1.57.

Oracle's growth engine has been cloud infrastructure, where it competes with Amazon Web Services and Microsoft Azure as businesses move workloads out of their own data centers. The demand for computing power to handle artificial intelligence projects is soaring, and Oracle's cloud infrastructure unit saw a 52% increase in revenue from the previous year to $2.4 billion. Additionally, Oracle recently signed an agreement with Facebook, allowing the social media company to use its infrastructure to help with various projects related to the Llama family of large language models.

Larry Ellison, founder of Oracle Cloud Infrastructure, stated that the company trains several of the world's most important generative AI models because it is faster and less expensive than other clouds.

Piper Sandler analysts increased their stock price target from $185 to $210, citing Oracle's 20% cRPO growth as evidence of continued cloud momentum. This growth indicates that there is still contracted revenue that has not yet been booked.

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