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One more stroke of luck with a new version of an unfortunately familiar 2024 business technology story: profits up, revenue up, stock price down, as greedy Wall Street expectations were not met by Oracle, despite its cloud business being progressive.
For the second quarter of 2025, net profits rose 26% year-over-year to $3.15 billion, on total revenue of $14.06 billion, up nine percent from the same period last year. Cloud services and licensing support sales rose 12% to $10.8 billion, accounting for more than three-quarters (77%) of the total and are also the fastest growing item, while cloud infrastructure revenue rose 52% to $2 .4 billion. of the growing demand for AI.
Wall Street’s response? An eight percent drop in Oracle’s stock price.
In fact, Oracle’s cloud revenues could reach $2 billion for the full fiscal year, CEO Safra Catz predicted:
Our cloud is faster and cheaper than other clouds. We remain the cloud of choice for both AI workloads and non-GPU cloud infrastructure services. Additionally, our ability to deploy our cloud in many formats gives our customers flexibility, and our multi-cloud agreements with Microsoft, Google and AWS give customers more choice in how they can migrate their Oracle databases to the cloud. And our strategic SaaS applications continue to grow rapidly. And we’re also seeing more and more of our industry-focused cloud applications come online, directly contributing to revenue growth.
CTO Larry Ellison discussed the impact of generative AI on Oracle’s infrastructure business, saying:
Oracle Cloud Infrastructure trains some of the world’s leading generative AI models. Our top AI customers include OpenAI, xAI, Nvidia, Cohere, and most recently Meta with their large-scale Llama models. Oracle continues to win large amounts of AI training work because we are faster and cheaper than the other infrastructure clouds. And we just extended our AI performance advantage by delivering the world’s largest and fastest AI supercomputer, scaling up to 65,000 Nvidia H200 GPUs.
From a customer perspective, Ellison pointed out that the rollout of cloud regions makes service adoption easier:
We don’t have to stock up like our competitors do. Our competitors offer some of their services in some regions and some of their services in other regions. We have all our services in all our regions…If all our racks are the same and all our services are the same, they become very easy, or I should say, easier to automate. They are all identical. We have one suite of automation tools that works in all 100 of our current regions.
And it makes it possible, because of its high degree of automation, to manage not dozens of regions, but hundreds or, even theoretically, thousands of regions, while individual customers assign their own region. Individual customers purchase and install entire Oracle regions. What appears to be on-premises, even though it is an entire Oracle Cloud region, happens to be in a dedicated data center for that customer. We also sell a lot of them.
So it allows us to tap into a market that our competitors cannot reach. Standardization, automation and from the smallest to the largest data centers therefore give us a huge advantage when competing in this market.
The company’s multi-cloud partnerships with Microsoft, Google and AWS – which host the Oracle database on these vendors’ platforms – also give Oracle a competitive advantage, he argued. It’s still early here, he added:
Microsoft is the only partner where the contract is more than a year old. So Google is much more recent and AWS even more recent than Google. So we’re just at the beginning of multi-cloud… it will generate well over $100 million in the first year. The first year starts when we got AWS, when we had all three. It will be a billion dollar business.
This is just the beginning of the beginning.
Regardless of Wall Street’s now-typical short-termism and overly high expectations, Oracle is ending the calendar year with a strong second quarter, with all major business units on the rise and the prospect of more to come, as Catz noted:
In the second half of this year, a lot of capacity will come online that we have been waiting for and working on. So we expect you’ll see this turn into revenue. Everything goes even faster.
Forward!
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