Better AI Stock: Amazon vs. Oracle

Core Viewpoint - The article compares two major AI stocks, Oracle and Amazon, to determine which is a better investment choice currently Group 1: Oracle - Oracle's stock has increased by 79% over the last three years, outperforming the S&P 500's 26% growth during the same period [2] - The surge in Oracle's stock is attributed to rising demand for AI data centers, leading to improved revenue growth [4] - In the most recent quarter, Oracle's total revenue rose by 6% year over year to $14.1 billion, with cloud services revenue growing by 10% [4] - Although the 6% growth is lower than the double-digit gains seen in 2023, it exceeds the company's 10-year average of 4% [5] - Oracle is investing heavily in new data centers to increase its market share in the cloud services sector, aiming to compete with major players like Amazon, Microsoft, and Google [7] - The bullish case for Oracle hinges on the increasing demand for AI data centers, which could justify its price-to-earnings ratio of 34 and significant capital expenditures [8] Group 2: Amazon - Amazon is the largest cloud services company, with its AWS division generating over $100 billion in annual revenue and holding a 30% share of the global cloud services market, compared to Oracle's 3% [9] - Amazon is developing its own AI chips, known as Trainium, to reduce costs and reliance on suppliers like Nvidia [10] - The company has invested $8 billion in Anthropic, a startup focused on AI solutions, which could enhance Amazon's operations [11] - Amazon's extensive e-commerce business provides numerous opportunities to leverage AI for efficiencies and cost savings, potentially improving profitability [12] - Amazon is characterized as an AI conglomerate pursuing multiple pathways to benefit from the AI boom, beyond just data center growth [13] Group 3: Investment Considerations - The choice between Oracle and Amazon depends on the investor's focus; Oracle may be preferable for those concentrated on data center growth, while Amazon offers a broader range of AI initiatives [14]