Forget Nvidia: Oracle Is a Better AI Stock to Buy Right Now.

Oracle's cloud business demonstrated robust growth, with remaining performance obligations (RPO) soaring 359% year-over-year to $455 billion, reflecting significant multi-year contract wins and providing substantial revenue visibility. This contract-based growth model, alongside strong IaaS and multicloud momentum and a new quarterly dividend, contrasts with Nvidia's more cyclical, shipment-driven revenue, positioning Oracle as a potentially more stable AI infrastructure play for investors.

Analysis

Oracle's financial position has been substantially strengthened by a monumental increase in its cloud business backlog, with remaining performance obligations (RPO) surging 359% year-over-year to $455 billion. This step-function increase, driven by several multi-billion dollar AI-related contracts, provides exceptional multi-year revenue visibility, a key differentiator from hardware-centric AI plays. This backlog underpins management's aggressive guidance for Oracle Cloud Infrastructure (OCI), which is projected to grow 77% to $18 billion this fiscal year and scale to $144 billion within five years. The strategy is further validated by a 1,529% growth in multicloud database revenue from partners including Amazon, Google, and Microsoft. In contrast, while Nvidia continues to post exceptional results with 56% year-over-year revenue growth, its business model shows signs of cyclicality. A 1% sequential dip in compute revenue, attributed to a reduction in H20 product sales and zero shipments to China, alongside rising inventory ($15.0 billion) and purchase commitments ($45.8 billion), highlights its dependence on hardware shipment cycles and geopolitical factors. The core distinction is Oracle's transition to a more predictable, contract-based revenue model versus Nvidia's powerful but inherently more volatile shipment-driven model.

Key Decisions for Investors

• Investors should re-evaluate Oracle based on its rapidly growing RPO and contract-based revenue, which provides a clearer and more durable growth trajectory in the AI sector compared to more cyclical hardware suppliers.
• Consider initiating or increasing positions in Oracle to gain exposure to the AI infrastructure buildout with potentially lower volatility, as its multi-year contracts may smooth revenue and earnings over time.
• For those holding Nvidia, it is critical to monitor inventory levels, purchase commitments, and the impact of product transitions and trade regulations, as these factors are key drivers of its inherent cyclicality and potential stock volatility.
• The 1,529% growth in Oracle's multicloud database revenue with hyperscalers suggests the AI infrastructure market is expanding for multiple vendors, warranting a portfolio approach rather than a single-stock bet, while Oracle's $0.50 dividend adds a capital return element to its growth story.