Oracle Share Price Recovers 1.70% to Trade at Rs. 8003.50, Will Momentum Hold After Q2 Miss?

Overview:

• Oracle’s share price fell more than 11% in extended US trading and nearly 12% in Europe after Q2 results.

• The company posted $16.06 billion in revenue, up 14% year-over-year, but still short of the analyst estimate of $16.21 billion. This miss affected market confidence.

• Earnings per share of $2.26 looked strong, but the beat came from a one time gain. This raised doubts about the underlying performance of Oracle’s main businesses.

Oracle share price faced a sharp setback on December 10. The stock plunged over 11% in extended US trading and mirrored a nearly 12% drop in European markets. However, on Dec 11 at press time, the stock recovered to Rs. 8003.50, up 1.70%. The initial decline followed quarterly results that underscored rising costs, slower-than-expected revenue recognition.

The market reaction was immediate and decisive. Despite stronger cloud infrastructure momentum and encouraging forward guidance, investors focused primarily on the earnings miss. Let’s explore an in-depth Oracle share price analysis based on Moneycontrol data.

Revenue Miss and Slower Recognition Pressure Sentiment

The company reported Q2 revenue of $16.06 billion, up 14% from last year but slightly below the $16.21 billion consensus estimate. Although earnings per share came in at $2.26, comfortably beating forecasts. The upside was driven by a one-time gain rather than core operational performance.

A key area of concern was Oracle’s revenue recognition timeline. Remaining Performance Obligations (RPOs), future contracted revenues yet to be recognized, surged dramatically to $523 billion. It was boosted by long-term commitments from major clients such as Meta and Nvidia. However, Oracle offered no clarity on when these revenues would actually be booked, leaving analysts wary of near-term topline visibility.

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Cloud Growth Strong, but Not Enough

The tech giant’s cloud infrastructure business was a bright spot, growing 68% year-over-year to $4.1 billion. Yet even this high-octane performance came in marginally below expectations. Meanwhile, the company’s software business contracted 3%, falling to $5.9 billion, further weighing on overall growth perceptions.

Debt Concerns Intensify as AI Investments Ramp Up

The more pressing issue for investors is Oracle’s aggressive pursuit of AI cloud infrastructure clients. Management disclosed that capital spending is expected to rise by $15 billion, bringing full-year capex guidance to $50 billion, up sharply from the earlier estimate of $35 billion.

This expansion has been increasingly debt-led. Oracle recently executed an $18 billion bond sale, one of the largest in technology history. While the company maintains its commitment to preserving an investment-grade debt rating. Analysts remain cautious about the long-term sustainability of this funding strategy. The company’s reliance on the massive $300 billion OpenAI infrastructure contract, for which financing and deployment timelines remain uncertain.

Market Reaction and Outlook

Oracle share price chart on Moneycontrol shows gains of 1.69% at the time of writing: 

Jefferies described the Q2 results as ‘mixed,’ acknowledging the strong backlog while noting concerns around debt funding and capital intensity. Oracle’s shares are currently trading around $199, and if losses persist through regular trading, the stock could erase nearly half its value from the $345 all-time high recorded in September.

For the upcoming quarter, Oracle expects revenue growth between 19–21%, aligning with analyst estimates. However, without clearer visibility into revenue conversion and capital discipline, investor sentiment may remain fragile.

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FAQs

1. Why did Oracle share price fall so sharply?

Oracle’s stock plunged because the company missed revenue expectations and raised its capital spending plans dramatically. Investors also worried about slow revenue recognition and the growing reliance on debt to fund AI infrastructure.

2. Did Oracle report good earnings this quarter?

Oracle reported decent earnings per share, but most of the improvement came from a one-time gain. Revenue growth was strong but still fell short of expectations, which made investors cautious about the actual performance.

3. What is causing concern about Oracle’s AI investments?

Oracle is spending heavily on AI data centers to win big clients. The concern is that these investments are being funded mostly through debt, and the company has not explained how quickly these investments will turn profitable.

4. Why is revenue recognition a major issue for Oracle?

Oracle has signed long-term contracts worth over $523 billion. However, it did not say when this revenue will appear in its financial results. This uncertainty makes it harder for investors to judge near-term performance.

5. What should investors watch for in the next quarter?

Investors should look for clearer timelines on when Oracle will convert its huge backlog into revenue. They should also watch whether capital spending stabilizes and whether the company can grow cloud revenue consistently.