Amazon vs. Oracle: Which Cloud Computing Stock is a Better Bet?

Core Viewpoint - Amazon is positioned as a stronger investment opportunity compared to Oracle in the cloud and AI sectors due to its scale, comprehensive capabilities, and diversified revenue streams, while Oracle faces execution challenges and a fragmented strategy [20]. Group 1: Amazon's Performance and Strategy - Amazon's AWS reported Q1 2025 revenues of $29.3 billion, a 17% year-over-year increase, establishing an annualized revenue run rate of $117 billion [3]. - The retail segment shows resilience with record delivery speeds and strong consumer engagement, with everyday essentials growing twice as fast as the rest of the business [4]. - Amazon's global ambitions are highlighted by a $5+ billion partnership with Saudi Arabia's HUMAIN to create an "AI Zone" [5]. - The company's Q1 operating income grew 20% year-over-year to $18.4 billion, with EPS of $1.59, exceeding forecasts by 23 cents [6]. - The Zacks Consensus Estimate for 2025 net sales is $693.74 billion, indicating an 8.74% growth from the previous year, with earnings expected to jump 13.92% to $6.3 per share [7]. Group 2: Oracle's Performance and Challenges - Oracle's Q3 2025 revenues reached $14.13 billion, growing only 6.40% year-over-year and missing projections by $259.18 million [8]. - Total cloud revenues for Oracle were $6.2 billion, significantly lower than AWS, highlighting capacity constraints and limitations in infrastructure scale [9]. - Oracle's strategic focus appears scattered, lacking the coherent vision that Amazon demonstrates, making it vulnerable to cloud-native alternatives [10]. - The company's Remaining Performance Obligations (RPO) grew 63% to $130 billion, but skepticism exists around conversion rates and timing [11]. - Oracle's fiscal 2025 earnings consensus is $6.03 per share, down 0.3% over the past 60 days, indicating challenges in meeting growth expectations [12]. Group 3: Valuation and Market Performance - Amazon's forward P/E is approximately 30.66x, justified by its diversified revenue streams and market leadership, while Oracle's forward P/E of 24.2x reflects slower growth and execution challenges [13]. - Amazon's shares have climbed 3.5% over the past 6 months, outperforming Oracle, which declined 16.6% [15]. - Amazon's enterprise value to free cash flow ratio presents a more compelling investment case, emphasizing its ability to reinvest cash flows into high-return initiatives [19].