Oracle stock has been downgraded by JP Morgan based on its CIO survey that didn't paint a rosy picture for Big Red's cloud services business.
According to analyst JP analyst Mark Murphy, CIOs are planning to cut their spending with Big Red, which has led the investment bank to lower its ratings of the firm's shares from overweight to neutral.
Murphy has told clients that a survey of 154 CIOs revealed negative spending intentions towards Oracle, with CNBC reporting that his note said just 2 per cent of respondents said Oracle was their most integral vendor for cloud computing.
In contrast, 27 per cent chose Microsoft and 12 per cent opted for Oracle CTO Larry Ellison's cloudy nemesis Amazon. The analyst's note added that CIOs have told the analysts they are migrating off Big Red and onto Microsoft SQL Server, Amazon databases and PostgreSQL.
The reports may come as no surprise to customers who have long been frustrated with Oracle's strong-arm tactics to get them to shift to the fluffy stuff, as the legacy database vendor becomes increasingly desperate to catch up to other cloud vendors.
But the truth is hard to escape – even for Ellison's bluster – and Murphy is reported to have told clients that the CIOs' feelings toward Oracle, which "have arced over into negative territory", makes the firm "uncomfortable because the results of our CIO surveys over the years have been highly predictive".
Describing this as a "dive" from previous surveys – which he acknowledged showed only "lukewarm" feelings toward Oracle – Murphy advised a downgrading of the database giant.
"Oracle's strength in database and middleware is countered by long-term uncertainty in applications and hardware as IT consumption preference shifts from traditional, on-premises solutions to public cloud models," Murphy stated.
Oracle's shares dipped after the JP Morgan report, falling 4.91 per cent on Thursday to $48.28. The latest share price is $45.90, which isn’t the lowest point this year – it sunk to $45.89 in March after its Q3 earnings report.
The firm is due to report its results for the final quarter of its 2018 financial year on 19 June. This will be compared to strong results in the fluffy stuff in the previous year’s quarter.
Oracle did not immediately respond to a request for comment. ®