On Tuesday, Oracle (ORCL.N) predicted revenue for the current quarter below projections set by Wall Street, and the company barely missed expectations for the first quarter. This was because a difficult economy hampered cloud expenditure by companies, which caused Oracle’s shares to drop by 9 percent during extended trading.
Businesses are revising their plans for digitalization in response to an increase in cloud demand during the pandemic. This is problematic for Oracle since the company is trying to play catch-up in a market dominated by bigger competitors such as Amazon Web Services (AMZN.O) and Microsoft (MSFT.O).
However, experts believe that the growing popularity of artificial intelligence (AI) applications may help improve Oracle’s cloud infrastructure business. This is because the advancements in Oracle’s networking technology make it more equipped to handle the workloads associated with AI.
“As of now, artificial intelligence development businesses have inked commitments to acquire more than $4 billion in capacity in Oracle’s Gen2 Cloud. Larry Ellison, Chairman and Chief Technology Officer of Oracle, says, “That’s twice as much as we had booked at the end of Q4.”
Ellison, who describes himself as being good friends with Tesla CEO Elon Musk, announced that Musk’s artificial intelligence (AI) firm, xAI, has inked a deal with Oracle to train AI models on the company’s Gen2 Cloud.
In addition to this, he said that all nine of Berkshire Hathaway’s utility firms would upgrade their current enterprise resource planning systems to be compatible with Oracle’s Fusion Cloud apps. Oracle’s share price has increased by around 55% this year.
According to the data provided by LSEG, the company projected an increase in sales for the second quarter of between 5% and 7%, which was lower than the average projection of 8.2% by analysts. In addition, it anticipates an adjusted earnings per share of between $1.30 and $1.34, which compares to the consensus estimate of $1.33.
The total revenue for the first three months came in at $12.45 billion, somewhat lower than the projections of $12.47 billion.
It earned $1.19 per share, excluding items, more than the projections of $1.15 per share.
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