Reuters Oracle projected currentquarter revenue below Wall Street targets on Monday and narrowly missed expectations for the first quarter as a tough economy pressured cloud spending by businesses, sending its shares down 9 in extended trading.

After a surge in cloud demand during the pandemic, businesses are rethinking their digitization plans, hurting Oracle as it plays catchup in a segment dominated by larger rivals such as Amazon Web Services and Microsoft.

Still, analysts have said that the rise in adoption of artificial intelligence AI applications could boost Oracle39;s cloud infrastructure business because the advances made in its networking technology are more suited to take on AI workloads.

As of today, AI development companies have signed contracts to purchase more than 4 billion of capacity in Oracle39;s Gen2 Cloud. That39;s twice as much as we had booked at the end of Q4, Oracle Chairman and CTO Larry Ellison said.

Ellison, a selfdescribed close friend of Elon Musk, announced that the Tesla CEO39;s AI startup xAI had signed a contract to train AI models in Oracle39;s Gen2 Cloud.

He also said all nine utility companies owned by Berkshire Hathaway will replace their existing enterprise resource planning systems with Oracle39;s Fusion Cloud applications.

Shares of Oracle have gained about 55 so far this year.

The firm forecast secondquarter revenue growth of between 5 and 7, lower than analysts39; average estimate of 8.2, according to LSEG data. It also…