Oracle Shares Drop 13% Following Disappointing Forecast
Markets are under pressure this morning as index futures slide following disappointing corporate news and lingering concerns over the technology sector. Oracle's shares are sharply lower after a downbeat forecast and heavy capital spending tied to its AI business. This drag on tech names like Nvidia, Microsoft, Broadcom and other AI-linked equities has knocked futures lower and put a cooler tone on the market.Globally, markets are mixed. Some Gulf markets are holding modest gains in response to the Fed easing, while Asian and European tech-heavy indices have softened in the wake of the tech selloff. Currency and bond markets are also reacting to the Fed's messaging and macro dynamics.In pre-market trading, S&P 500 futures fell 0.4%, Nasdaq futures fell 0.62% and Dow futures were flat.Check out this morning's top movers from around Wall Street, compiled by The Fly.HIGHER -Geminiup 9% after receiving a designated contract market license from the Commodity Futures Trading Commission, which will allow Gemini to begin offering prediction markets to U.S. customersCorbus Pharmaceuticalsup 8% after completing the single ascending dose and multiple ascending dose Phase 1a study of CRB-913Eli Lillyup 1% after reporting each dose of retatrutide met all primary and key secondary endpoints in its TRIUMPH-4 clinical trialUP AFTER EARNINGS -Cienaup 8%DOWN AFTER EARNINGS -Oracledown 13%Oxford Industriesdown 21%Lovesacdown 16%Hooker Furnituredown 14%Manchester Uniteddown 2%Vera Bradleydown 1%
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Oracle's Cloud Market Share Growth and Financial Outlook
- Cloud Market Share Increase: Oracle's focus on high-performance computing has raised its cloud market share from 2% in 2024 to 3%, showcasing a competitive edge in a $944 billion industry, with expectations for further growth by 2026.
- Strong Financial Performance: For the first half of fiscal 2026 ending November 30, 2025, Oracle's cloud segment generated over $15 billion in revenue, a 31% year-over-year increase, driving overall revenue to $31 billion with the cloud segment accounting for 49%.
- Future Growth Potential: Analysts forecast a 17% revenue growth for fiscal 2026 and 29% for the following year, which could enhance Oracle's stock performance despite its current debt of $108 billion.
- Strategic Investment Returns: While Oracle's heavy investment in cloud infrastructure has increased its debt, its P/E ratio of 33 is close to the S&P 500 average of 31, indicating market confidence in its future growth prospects.
Software Stocks Face Worst Month Since 2008
- Market Reaction: The iShares Expanded Tech-Software Sector ETF (NYSE:IGV) is on track for its steepest monthly drop since October 2008, with a roughly 6% plunge in a single session on Thursday, indicating investor concerns over traditional business models.
- Microsoft's Stock Plunge: Despite Microsoft exceeding Wall Street expectations in its latest earnings report, its stock fell over 12% due to slowing Azure cloud growth and cautious guidance, marking its worst day since the lockdown, reflecting worries about AI monetization durability.
- Analyst Perspective Shift: Thomas Shipp from LPL Financial raised the question of whether software can survive AI, suggesting that the sector's fundamentals are changing, and software companies will need to offer AI enhancements to maintain market share moving forward.
- Pessimistic Demand Outlook: Jordi Visser from 22V Research warned that markets are nearing a significant inflection point, shifting from a cloud-centric software cycle to a physical-world infrastructure cycle, with AI potentially suppressing software demand and altering long-term investor expectations.
