Oracle vs. Microsoft: Which Cloud & AI Giant is the Better Buy Now?

Core Insights - Oracle and Microsoft are major players in the cloud computing and AI sectors, leveraging their enterprise software foundations to capitalize on the growth in AI-driven cloud infrastructure [1] - The global cloud infrastructure market is expected to reach $2 trillion by 2030, with generative AI projected to drive $200-$300 billion in annual cloud spending [1] Oracle's Position - Oracle's remaining performance obligations surged by 359% to $455 billion, bolstered by a $300 billion deal with OpenAI starting in 2027 [2][8] - Oracle Cloud Infrastructure achieved a 55% revenue growth in the latest quarter, nearing an annual run rate of $18 billion for fiscal 2026 [3] - The company is expanding aggressively with plans to exceed competitors in cloud region coverage, having brought 101 cloud regions online [3] - Oracle's multi-cloud strategy integrates its infrastructure within AWS, Microsoft Azure, and Google Cloud, enhancing its database performance for customers [4] - Despite strong cloud growth, Oracle's total revenue grew only 7% year over year to $14.9 billion, indicating reliance on its cloud segment [5] Microsoft's Position - Microsoft Cloud surpassed $40 billion in quarterly revenues, growing at 21% year over year, with its AI business reaching a $13 billion annual run rate, up 175% year over year [6] - The company announced a $30 billion investment in the UK, including building a supercomputer with 23,000 NVIDIA GPUs, showcasing its commitment to AI infrastructure [7] - Microsoft's diverse AI strategy includes Azure, productivity tools like Copilot, and partnerships with OpenAI and Samsung, creating multiple revenue streams [9] - The company reported a 17% growth in operating income and returned $9.4 billion to shareholders through dividends and buybacks in fiscal Q4 2025 [9] Valuation Comparison - Microsoft trades at a forward P/E of 31.94x and a price-to-sales ratio of 11.4x, while Oracle has a forward P/E of 41.35x and a price-to-sales ratio of 11.89x [10] - Microsoft shares have returned 20.6% year-to-date, compared to Oracle's 78% surge [14] Conclusion - While Oracle shows impressive growth and a significant backlog, Microsoft is positioned as the superior investment choice due to its diversified AI monetization strategies and financial strength [18]