Oracle Faces Supplier Fallout with Super Micro
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Should l Buy ORCL?
Source: Fool
- Order Cancellation Impact: Oracle's cancellation of 300 to 400 Super Micro GB300 NVL72 server racks, each costing $3.5 million, could result in a staggering $1.05 billion to $1.4 billion in lost sales for Super Micro, significantly affecting its financial outlook.
- Shipment Analysis: Despite the order cancellation, Super Micro managed to ship between 100 and 200 racks prior, partially mitigating losses; however, the overall sales outlook remains bleak, especially with increasing competition from xAI.
- Market Reaction: Oracle's stock plummeted 6% in early trading, reflecting market concerns over the deteriorating relationship with Super Micro, as investors express worries about the company's spending and risk management in the AI sector.
- Strategic Adjustment Considerations: Analysts suggest that Oracle's decision to cancel orders may be aimed at distancing itself from allegations involving Super Micro's co-founder related to illicit Nvidia chip sales, while also indicating concerns over overextending in AI investments, highlighting the tension between costs and revenue growth.
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Analyst Views on ORCL
Wall Street analysts forecast ORCL stock price to rise
34 Analyst Rating
25 Buy
9 Hold
0 Sell
Moderate Buy
Current: 163.830
Low
180.00
Averages
309.59
High
400.00
Current: 163.830
Low
180.00
Averages
309.59
High
400.00
About ORCL
Oracle Corporation offers integrated suites of applications plus secure, autonomous infrastructure in the Oracle Cloud. The Company operates through three businesses: cloud and license, hardware and service. Its cloud and license business is engaged in the sale, marketing and delivery of its enterprise applications and infrastructure technologies through cloud and on-premise deployment models including its cloud services and license support offerings, and its cloud license and on-premise license offerings. Its hardware business provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments. Its services business provides services to customers and partners to help maximize the performance of their investments in Oracle applications and infrastructure technologies.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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