(Bloomberg) — Oracle Corp. reported slowing quarterly sales growth in its cloud computing business, fueling investor fears that the software maker’s expansion efforts have yet to gain ground in the competitive market. The shares fell about 8% in extended trading.

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Cloud revenue rose 25% to $4.8 billion in the period ended Nov. 30, after a 30% gain in the previous quarter. It was the second consecutive quarter of slowing growth.

The Austin-based company, known for its database software, is focused on expanding its cloud infrastructure business to more forcefully compete with Inc., Microsoft Corp. and Alphabet Inc.’s Google. That initiative to rent out computing power and storage over the internet hit a snag in September when Oracle reported its first infrastructure growth slowdown after more than a year of acceleration.

Investors are waiting to see an improvement, said Bloomberg Intelligence’s Anurag Rana in an interview on Bloomberg TV. “Their infrastructure growth came in below what analysts were expecting,” he said. That growth rate was 52% in the fiscal second quarter, down from 66% the previous period.

Still, Oracle executives remain bullish on the business. Chief Executive Officer Safra Catz said in a statement that demand “is increasing at an astronomical rate.” Chairman Larry Ellison said Oracle continues to spend to expand its capacity to provide computing power and other cloud services, including building 100 new data centers. “Demand is over the moon,” he said in the statement.

Ellison, on a conference call after the results were released, said infrastructure growth should be “over 50% for a few years.”

Future gains will hinge not just on customer demand, but the availability of graphics processors used in data centers to power artificial intelligence workloads, wrote Siti Panigrahi, an analyst at Mizuho, ahead of the results.

On the call, Catz said Oracle would have been able to recognize “hundreds of millions of dollars” more in quarterly cloud sales if capacity was available.

In the current quarter, total revenue should increase about 6.5%, Catz said on the call. Analysts, on average, estimate a 7.5% jump. Cloud sales, excluding revenue from the Cerner health unit, will gain about 27%, she said, which would be an acceleration from the fiscal second quarter. The company said it remained committed to its previous long-range financial targets for the 2026 fiscal year.

The shares dropped to a low of $103.82 in extended trading after closing at $115.13 in New York. The stock has gained 41% this year, lagging behind the iShares Expanded Tech-Software Sector ETF rally of 55%.

Fiscal second-quarter sales increased 5% to $12.9 billion, the company said Monday in a statement. Analysts, on average, estimated $13.1 billion, according to data compiled by Bloomberg. Profit, excluding some items, was $1.34 a share, compared with the average estimate of $1.33.

Of the cloud revenue, $1.6 billion came from renting out computing power and storage over the internet and $3.2 billion from applications.

Sales of Fusion software for managing corporate finance increased 21% in the quarter. Revenue from NetSuite, enterprise planning tools aimed at small- and mid-sized companies, also jumped 21%. Sales at both businesses gained 21% in the previous period.

Another point of concern is that acquired health records business Cerner is growing slower than Wall Street expected. Management said in September that the company is working to shift Cerner’s legacy software business to the cloud, which means it must change the structure of contracts with many customers. Earlier this year, Oracle cut jobs in the division, which was purchased for about $29 billion in June 2022.

Half of all existing Cerner electronic health software customers will be on the cloud by February, Ellison said during the call. All of Cerner’s products are “very quickly moving from a license basis to a subscription basis,” he said.

Catz said Cerner revenue will decline 1 to 2 percentage points in the fiscal year. After that, the unit “will no longer be a drag on Oracle growth,” she said.

(Updates with long-range targets in the ninth paragraph.)

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