Oracle Stock Drops Despite New Deals With Nvidia and Meta: Here’s What Investors Should Know
Oracle shares fall sharply despite new AI deals with Nvidia and Meta, as quarterly revenue misses estimates. Experts weigh in on the future of Oracle stock amid AI bubble concerns.
Oracle headquarters in Redwood City, California, where AI partnerships with Nvidia and Meta are driving investor interest despite recent stock decline.
Oracle’s shares tumbled sharply on Wednesday following the release of its quarterly results, even as the cloud computing giant announced new agreements with AI heavyweights Nvidia (NVDA) and Meta Platforms (META).
The tech giant reported that these new collaborations helped push Oracle’s backlog to a record $523 billion. However, fiscal second-quarter revenue came in at $16.06 billion—a 14% increase from the same period last year—but fell short of analysts’ expectations. Adjusted earnings of $2.26 per share exceeded forecasts, yet that wasn’t enough to prevent an 11% drop in after-hours trading.
Why Oracle’s Stock Is Falling
Oracle’s stock has retreated from its September highs, following a surge fueled by strong earnings. Investor concerns over a potential AI bubble, coupled with the company’s reliance on a few major AI customers, have weighed on sentiment. Despite the high-profile deals with Meta and Nvidia, Wall Street analysts remain cautious, highlighting the need for broader demand for Oracle’s AI offerings.
Some investors have also expressed unease about circular relationships in AI contracts, where suppliers and clients may create perceived growth without wider adoption. The company’s mention of Meta as a major AI spender did little to assuage these concerns, while Nvidia’s role as a key chip supplier raised questions about overlapping commitments.
Looking Ahead
For the third quarter, Oracle projected adjusted earnings per share between $1.70 and $1.74, aligning with analyst expectations. The company also anticipates revenue growth of 19% to 21%, exceeding market forecasts.
Despite the recent pullback, Oracle’s stock remains up roughly 33% since the start of the year. However, that gain is modest compared with the 100% year-to-date growth the stock experienced back in September.
Investors will continue monitoring Oracle’s AI initiatives and client diversification as key factors influencing the stock’s performance in the coming months.
