Oracle stock plunges more than 16% after revenue falls short

Shares of Oracle were in a free fall Thursday morning following an earnings report that saw the tech firm fall short of analysts' revenue expectations.

The company plunged more than 16% when the market began trading Thursday. That takes the stock well below the level it stood at on Sept. 4, right before it saw a big spike when it reported it had $455 billion in remaining performance obligations, contracted revenue that has not yet been recognized. (That same week, the company signed a staggering $300 billion deal with OpenAI for computing power over the next five years, approximately.)

Oracle's tumble spilled over to other AI-related stocks in early trading Thursday, including Nvidia, which was off 3%; AMD, down nearly 4%; and Coreweave, which tumbled more than 6%.

The revenue shortfall was nothing new for Oracle. Even in the first quarter earnings in September, it failed to meet analyst expectations on earnings per share and revenue, but the cloud news overshadowed those misses. Without such a headline this quarter (and with AI bubble fears still on investor minds), the company is feeling that miss after its Q2 report.

Analysts say the drop is overblown, pointing to the company's Remaining Performance Obligation (RPO), a forward-looking metric that represents the value of future services from signed contracts that haven't been delivered yet. That number beat expectations.

"Last night Oracle's earnings caused some more jitters for tech investors as the company came in light of Street numbers," wrote Wedbush analyst Dan Ives in a note to clients. "While the bears will run with this number and yell fire in a crowded theater this morning we strongly disagree with this view as Oracle's all-important RPO came in at $523 billion vs. the Street at $500 billion....this is the number we are most focused on around the future and health of Oracle's AI buildout and strategy looking ahead."