Broadcom vs. Oracle: Which AI Stock Is the Better Buy Right Now?

Core Insights - Both Broadcom and Oracle have reported significant earnings growth driven by artificial intelligence (AI) demand, with Oracle experiencing one of its largest single-day stock surges in decades [1][2] Broadcom - In Q3 of fiscal 2025, Broadcom's revenue increased by 22% year-over-year to approximately $16 billion, with an adjusted EBITDA margin of 67% and non-GAAP EPS of $1.69 [4] - Management forecasts Q4 revenue of about $17.4 billion, with AI semiconductor revenue expected to rise to roughly $6.2 billion, reflecting a 63% growth from $5.2 billion in Q3 [4] - The trailing-twelve-month non-GAAP EPS for Broadcom is about $6.29, leading to a price-to-earnings multiple of around 58 times, indicating a premium valuation [5] - Broadcom's growth is heavily reliant on a few hyperscale customers, and there are cyclical risks in legacy networking and storage that could impact AI growth [6] Oracle - In Q1 of fiscal 2026, Oracle's revenue rose by 12% to $14.9 billion, with non-GAAP EPS increasing by 6% to $1.47, and remaining performance obligations (RPO) surged by 359% to $455 billion due to multiple large AI contracts [8][9] - Cloud revenue grew by 28%, with infrastructure-as-a-service revenue increasing by 55% [8] - Oracle's stock price increased by approximately 36% in a single day following the earnings release, reflecting strong investor sentiment [8] - The current trading price of Oracle is about $315, with a TTM non-GAAP earnings multiple of roughly 52 times, which is lower than Broadcom's valuation [10] Comparative Analysis - Both companies are positioned as strong beneficiaries of AI, with Broadcom showing immediate revenue and cash flow from AI hardware and networking, while Oracle has unlocked significant contracted demand that could lead to future growth [11] - The choice between the two companies hinges on their respective valuations; Broadcom has observable AI revenue but at a higher multiple, while Oracle's lower valuation is supported by a substantial backlog that needs to convert into revenue [12] - Oracle may present a more attractive option for investors willing to accept the execution risk associated with converting record bookings into billable usage at healthy margins, while Broadcom remains a high-quality AI investment but with less margin for error due to its premium valuation [12]