Oracle stocks dropped 12% on Tuesday, on track to reach its lowest point in over two decades. After releasing figures on Monday night that failed to meet expectations, and providing a weaker outlook, CEO Safra Catz attributed some of the blow to the transition of the Oracle Cerner business to the cloud.
Oracle's stocks crashed more than 12% on Tuesday, their worst showing in over two decades since March 2002 during the dot-com bust. This meant a $18 billion hit to the wealth of Larry Ellison, the world's fourth-richest person according to Forbes with a net worth of $142.5 billion, behind Jeff Bezos and before Warren Buffett.Analysts at Stifel estimated that investors had expected more AI and cloud-related growth than Oracle had managed to deliver. Oracle still reported higher-than-expected earnings, but revenue was $12.45 billion, falling short of the $12.47 billion average analyst estimate. Oracle is pushing AI features into its Fusion Cloud and Human Capital Management Software and CEO Safra Catz stated that to date AI development companies have purchased over $4 billion of capacity in Oracle's Gen2 Cloud, twice the amount from the previous quarter.However, Catz mentioned that there were challenges at Oracle's Cerner unit due to transitions to cloud subscriptions which would be recognized ratably rather than licensed purchases which are recognized upfront. Although Oracle's cloud services and license support segment came in with $9.44 billion, higher than expected, the cloud license and on-premises license segment still fell by 10% to $809 million, missing estimates.Despite Tuesday's hit, Oracle shares are still up 36% year to date, outperforming the S&P 500 which is up 17%.
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