Oracle (ORCL.N) anticipated quarterly revenue that was lower than projections on Monday. This resulted from the uncertain economy and fierce competition in the cloud computing industry, which significantly impacted demand for Oracle’s cloud products. As a result, Oracle’s shares dropped by more than 7% during extended trading.

Firms have been obliged to reduce their expenditures due to persistent inflation and high borrowing prices, which has been detrimental to businesses such as Oracle, which depends on corporate spending.

In October, Alphabet (GOOGL.O), Google’s parent company, also stated that its cloud segment had experienced the weakest growth in at least 11 quarters, raising worries about demand.

According to Gil Luria, a research analyst at D.A. Davidson, a significant factor that may have contributed to the outcomes was the acquisition of the Cerner company by Oracle in the previous year, in addition to the organization’s sustained slow investment in enterprise operations.

Oracle has projected that revenue growth for the current quarter, including Cerner, would be 6% to 8%. The middle point of this range is lower than the average estimate of growth that analysts had for the quarter, which is around 7.6%, according to data from LSEG.

In a teleconference with investors, CEO Safra Catz reported that the company’s total sales for the second quarter increased by 4% when Cerner was included and 6% when Cerner was excluded.

Oracle has been trying to strengthen its artificial intelligence infrastructure in response to the growing interest among businesses in using generative AI. The market is still dominated by Amazon (AMZN.O.) and Microsoft (MSFT.O.), the companies that are now taking the lead.

Oracle’s chances of gaining a significant market share are diminished because larger firms have already made significant inroads in the artificial intelligence ecosystem.

Through its artificial intelligence (AI) products, Microsoft boosted growth in the cloud computing category in October, surpassing Wall Street’s expectations for first-quarter performance across all segments.

Oracle reported revenue for the second quarter of $12.94 billion, which was lower than the analysts’ average expectation of $13.05 billion, according to LSEG statistics.

The company’s adjusted earnings for the quarter that ended on November 30 were $1.34 per share, which was closely above the projections.