>>> Oracle -- Although Oracle is not currently included among the major AI stock picks, this situation may soon change. With the stock down nearly 35% from its 52-week high, it now looks like an attractive pick for long-term investors, especially considering its critical role in building global AI infrastructure and the robust growth momentum of its cloud services.
Oracle's Remaining Performance Obligations (RPO), a metric highlighting the company's future revenue lock-in, is undoubtedly the most compelling reason to buy the stock. RPO soared 62% year over year to $130 billion in the third quarter of fiscal 2025 (ended Feb. 28, 2025) -- despite not including contracts from the $500 billion multicompany AI infrastructure initiativeProject Stargate. Hence, when Project Stargate materializes, it will dramatically boost the company's already-high RPO.
Oracle's cloud infrastructure unit is also growing at breakneck speed -- 51% year over year, far outpacing several hyperscaler competitors. The company is strategically building AI training infrastructure by creating a massive 64,000 GPU deployment with Nvidia's chips. The company has developed the Oracle AI Data Platform, enabling its vast customer base to analyze data stored in Oracle's existing databases using AI models from several prominent providers. This capability lets customers derive insights from data while keeping it private and secure. Management expects this to be a significant competitive advantage while targeting the rapidly expanding AI inferencing market.
Thanks to several solid tailwinds, management is guiding for 15% revenue growth in fiscal 2026 and 20% in 2027. The company has also raised its quarterly dividend by 25%, highlighting its commitment to returning value to shareholders.
Despite the many tailwinds, Oracle trades at 19.1 times forward earnings, far lower than its five-year average multiple of 32.6x. Considering its robust cloud infrastructure, strategic AI initiatives, and broad geographical presence, the valuation seems cheap -- opening an opportunity to buy the stock now.
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