2 AI Stocks to Buy and 1 to Avoid

Core Viewpoint - The market perceives Oracle (NYSE: ORCL) as potentially being a loser in the growth market, especially when compared to other hyperscalers like Alphabet (NASDAQ: GOOG, GOOGL) and Microsoft (NASDAQ: MSFT) [1] Equity Markets and Bond Markets - Oracle's stock price has recently declined, indicating negative market sentiment [2] - Investors should also monitor the bond market, as hyperscalers are borrowing to invest heavily in AI infrastructure [3] Financial Performance - Oracle is experiencing significant cash outflows due to investments, while Microsoft and Alphabet continue to generate substantial free cash flow despite increased capital spending [4] Bond Market Insights - Bond yields and credit default swaps (CDS) are important indicators of market risk perception [5] - Rising debt costs and CDS spreads for Oracle suggest increased risk compared to Microsoft and Alphabet, which are viewed as financially stronger investments in AI [6] Debt Comparison - Oracle's yield to maturity is significantly higher than that of Alphabet and Microsoft, indicating a greater risk premium required by the bond market [9] - The following yields to maturity for bonds maturing in approximately five years illustrate this disparity: - Alphabet: 4.10% - Microsoft: 3.75% - Oracle: 5.10% [10]