Oracle To Release Quarterly Earnings, But They Have a Big Profitability Problem
Oracle will be issuing its quarterly report soon and may not make its investors very happy after a lengthy period of unprofitability.
Quick overview
- Oracle is set to release its quarterly earnings report today, with its stock down 0.67% to $220 per share.
- The company has lost about 30% of its stock value since mid-November and needs a strong earnings report to reassure investors.
- Analysts predict Oracle will report earnings per share of $1.64 and revenue of around $16.19 billion, but concerns about their debt-for-growth model persist.
- Oracle's heavy reliance on AI investments and a $300 billion deal with OpenAI raises questions about its profitability and future guidance.
Later today, Oracle (ORCL) will be releasing their quarterly earnings statement, and their stock value has dipped 0.67% ahead of the earnings report, now down to $220 per share.
Oracle is trading slightly lower for Wednesday but will be revealing their quarterly revenue report later today. Their stock has been bearish since mid-November, losing about 30% since that time, so they need a strong earnings report to keep investors happy.
Oracle has been one of the biggest casualties of the AI bubble discussion in recent weeks, as investors fear that the market could collapse. Oracle has invested substantially into artificial intelligence technology, but they recently completed a $300 billion deal with OpenAI that requires the AI company to buy Oracle products for five years.
Can Oracle Turn Things around?
Wall Street analysts have issued their predictions for the upcoming quarterly report. They expect Oracle to report earnings per share of $1.64 and to announce revenue of around $16.19 billion for the quarter. If these predictions hold true, Oracle may be able to changeup the narrative surrounding their company and the wider AI market.
There is a problem, however, with relying solely on revenue and stock earnings. Oracle has been using a debt-for-growth business model. They will need to update investors on how that is working out for them and how they plan to utilize that model while still remaining profitable. Their future guidance will be incredibly important as they reveal their quarterly earnings.
Oracle has had a tough time staying profitable in recent months, and their heavy reliance on AI and OpenAI in particular has troubled investors. This company will have to convince shareholders that they have a strong plan to stay in the black in the coming months. They are one of the first companies that analysts point to when they talk about the bubble bursting, since Oracle has invested so much into a technology that has yet to earn them substantial profits.
The company is already planning to spend $38 billion to go further in debt to fund an extension to their data center. This could hamper their attempts to achieve profitability for years, and the problem is exacerbated by their growing backlog of unfulfilled orders as well as a lack of transparency about their revenue from various arms of their company. Even if their revenue is better than expected, it may not be enough to offset investor fears about where the company is headed and the lack of profitability it has demonstrated.
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