US Stock Market Move | Second-quarter profits "appear bloated" and cloud business growth falls short of expectations Oracle Corporation (ORCL.US) drops more than 13% in pre-market trading.

On Thursday, Oracle Corporation (ORCL.US) plummeted more than 13% in pre-market trading, closing at $193.84. On the news front, in the second quarter ending November 30, the company's total revenue increased by 14% to $16.1 billion, roughly in line with market expectations. Earnings per share, excluding specific items, were $2.26, exceeding market average expectations. Cloud computing sales grew by 34% to $7.98 billion, while infrastructure business revenue, which drew attention, increased by 68% to $4.08 billion, both slightly below analyst expectations. The company stated that profit growth benefited from the sale of its stake in chip manufacturer Ampere Computing, generating pre-tax income of $2.7 billion in the period. According to a statement released on Wednesday, the "remaining performance obligations" metric, measuring order size, soared to $523 billion as of the quarter ending November 30, more than five times higher. The negative financial data from Oracle Corporation sparked intense discussion on Wall Street. Despite earnings per share exceeding expectations significantly on a non-GAAP basis and cloud computing orders reaching a record high of $523 billion, true profits were inflated by a one-time income of $2.7 billion, with core business profit margins and cash flow under pressure. The slower-than-expected growth in cloud computing orders at Oracle Corporation has raised concerns about the conversion of actual profits, as cloud business growth is below expectations and capital expenditure skyrocketed, leading to negative free cash flow. These negative factors caused a sharp drop in Oracle Corporation's stock price after the financial report. UBS Group AG and Bank of America Corp swiftly lowered their target prices for Oracle Corporation following the report, while Morgan Stanley placed Oracle Corporation's stock rating under "cautious review," highlighting the market's focus on profit quality (particularly concerns about over-reliance on OpenAI for earnings) and the actual realization of backlogged orders.