Amazon vs. Oracle: Which Cloud Computing Stock is the Better Buy Now?

Core Insights - Cloud computing is experiencing rapid growth driven by artificial intelligence, with Amazon and Oracle adopting different strategies to capture market share in this trillion-dollar sector [1][2] Amazon (AMZN) Overview - Amazon Web Services (AWS) holds approximately 29% market share, generating $33 billion in revenues for Q3 2025, with a year-over-year growth rate of 20.2%, the highest in 11 quarters [2][3] - AWS reported $11.4 billion in operating income and has a cloud backlog of $200 billion, indicating strong revenue visibility [3][5] - Amazon has significantly expanded its infrastructure, adding over 3.8 gigawatts of power capacity in the past year and plans to double total capacity by 2027 [4] - The company has made substantial investments, including a $38 billion deal with OpenAI and a $50 billion investment in AI data centers [4] - The Zacks Consensus Estimate for AMZN's 2026 earnings is $7.87 per share, reflecting a 9.65% increase from the previous year [6] Oracle (ORCL) Overview - Oracle's Remaining Performance Obligations (RPO) have surged to $523 billion, a 438% increase year-over-year, with $68 billion in new commitments from major partners [7][10] - Cloud Infrastructure revenues grew 68% to $4.1 billion, driven by demand for AI training workloads [7] - Oracle's differentiated approach focuses on secure, high-performance infrastructure optimized for enterprise databases and AI models [8] - The company faces execution challenges, with a negative free cash flow of $10 billion in Q2 fiscal 2026 and increased capital expenditure guidance to approximately $50 billion [10] - The Zacks Consensus Estimate for ORCL's fiscal 2026 earnings is $7.42 per share, indicating a 23.05% growth over the previous fiscal year [11] Valuation and Market Performance - Amazon shares have returned 6.2% over the past six months, while Oracle shares have declined by 24.4% [12] - Both companies are currently considered overvalued, with Amazon trading at a forward price-to-sales (P/S) ratio of 3.18x and Oracle at 6.96x, despite Oracle's execution uncertainties [16] Conclusion - Amazon is positioned as the superior investment opportunity due to its strong execution, diversified revenue streams, and sustainable growth fundamentals, while Oracle's high RPO introduces concentration risks and requires flawless execution [19]