From Nasdaq: 2024-03-29 15:30:00

Microsoft’s (NASDAQ: MSFT) stock has risen nearly 1,000% in the past decade, making it the world’s most valuable company with a market cap of $3.2 trillion. The growth was driven by expansions in mobile, cloud, and AI ecosystems under CEO Satya Nadella since 2014. Microsoft is still a top AI stock, but investors are eyeing Oracle (NYSE: ORCL) as a potential rival with a smaller market cap of $350 billion.

Microsoft’s revenue comes from Windows, Office, Azure cloud platform, and other services. Growth in Azure and cloud-based services drove its expansion, including investments in AI tools. Oracle focuses on database software and cloud services following competition from Amazon and Microsoft. Its cloud revenue is 38%, compared to Microsoft’s 54%.

Oracle plans to grow its cloud services to offset slower divisions, banking on back-office applications, Oracle Cloud Infrastructure, and AI infrastructure contracts with Nvidia. Analysts forecast a 8% revenue CAGR and 22% EPS CAGR from fiscal 2023 to 2026, driven partly by buybacks. However, Oracle may not replicate Microsoft’s growth, and it may face challenges from larger competitors.

Oracle’s slower growth may not match Microsoft’s past performance, with analysts projecting a potential triple stock increase to $400 by 2033. Oracle aims to expand its cloud and AI businesses but remains smaller than Microsoft. Focus should be on strengths like growth in cloud services and AI, share buybacks, and reasonable valuation.

Investors considering Oracle should note it was not among the 10 best stocks identified by the Motley Fool Stock Advisor team. The service offers a blueprint for success, with guidance on portfolio building and regular stock picks. Returns since 2002 have tripled those of the S&P 500. John Mackey and Suzanne Frey are on the board of directors for Amazon and Alphabet, respectively, while Leo Sun holds positions in Amazon. The Motley Fool has positions in and recommends top tech stocks.



Read more at Nasdaq: Could Oracle Become the Next Microsoft?