Oracle Corporation (NYSE:ORCL) experienced a significant decline in its stock price, falling nearly 7% on December 10, 2024, marking its worst single-day drop in almost a year. The decrease follows a fiscal Q2 earnings report that reported $14.06 billion in revenue, just shy of the $14.1 billion anticipated by analysts, and an adjusted EPS of $1.47, below the expected $1.48.
Larry Ellison, co-founder and chairman of Oracle, saw his net worth decrease by $15 billion, bringing it down to $203 billion, due to his substantial 42% stake in the company.
Despite the earnings miss, Oracle's cloud business reported $10.81 billion in revenue, a 12% increase year-over-year, now accounting for 77% of the company's total revenue. However, concerns have arisen regarding the company's transition to cloud services, as its legacy business still constitutes 60% of operations. Analysts have noted a significant rise in capital expenditures, projected to reach 25% of revenue this year, as Oracle invests in AI-focused infrastructure.
Additionally, potential regulatory challenges, such as a possible TikTok ban in the U.S., could impact Oracle's partnership with ByteDance, further complicating the company's outlook. Nevertheless, some analysts remain optimistic, viewing Oracle's investments in cloud infrastructure and AI as crucial for long-term growth. Many have raised their price targets, citing partnerships with industry leaders like Google, Amazon, Microsoft, and Meta as evidence of its strong positioning in the market.