The hot artificial intelligence (AI) sector caused many stocks to soar. Among these are veteran tech firm Oracle (ORCL +5.05%) and semiconductor giant Nvidia (NVDA 0.22%).
Oracle shares are up about 54% over the past 12 months through Feb. 26. Nvidia stock gained 70% over that time. Both are poised to rise higher since each company was chosen to participate in the U.S. government's Stargate program, which plans to invest half a trillion dollars into AI infrastructure.
But if you had to choose just one of these AI success stories, which company makes for a superior long-term investment? Let's dive into Oracle and Nvidia to arrive at a verdict.
A look at Oracle's AI success
NYSE: ORCL
Key Data Points
Oracle has been a staple of the tech sector since its inception in 1977 with its database offerings. But the company's fortunes went into overdrive after the AI frenzy began in late 2022 with the arrival of ChatGPT.
For example, Oracle's revenue rose 9% year over year to $14.1 billion in its fiscal second quarter, ended Nov. 30, 2024. Its sales growth was due to the company's cloud computing business, which enjoyed a 24% year-over-year increase in Q2 revenue to $5.9 billion.
What caused its cloud division to see explosive growth? Businesses building AI need computing infrastructure to train the software to correctly execute tasks and are leveraging Oracle's global footprint of data centers to do so.
The company's cloud infrastructure makes sense for training AI. Oracle's history with databases, where AI data is stored, coupled with fast, low-cost cloud services, make AI training on Oracle's platform a compelling proposition. Consequently, the firm has become one of the top five largest cloud providers in the world.
This has not only meant higher sales. Oracle's fiscal Q2 earnings per share (EPS) rose 24% year over year to $1.10, showing the company's AI success translated into gains for shareholders.
Oracle is capitalizing on its AI prosperity by expanding its footprint of more than 150 data centers. The greater the number of facilities it owns, the more customer business it can support, thereby increasing income. The firm's founder and CTO Larry Ellison sees the possibility of eventually operating thousands of data centers as the path to future revenue growth.
Reasons to consider Nvidia
NASDAQ: NVDA
Key Data Points
Nvidia has been one of the biggest beneficiaries of the AI boom. The firm reported record quarterly revenue for the last seven quarters. The latest was its fiscal fourth quarter, ended Jan. 26, where it made $39.3 billion, a 78% increase from the prior year.
The reason for Nvidia's success is its products for data centers. The company provides components necessary for AI systems to process the vast amounts of data required by the software, such as for AI training. That's why Nvidia counts Oracle among its customers.
Because its products are critical for AI, Nvidia's Q4 sales to data centers grew a whopping 93% from a year ago to $35.6 billion. The company's strong performance translated into EPS of $0.89 in Q4, up 82% year over year.
Nvidia expects its sales success to continue thanks to the demand it's seeing for its new Blackwell computing platform, which was specifically designed for AI. As a result, the firm forecasted Q1 revenue for its 2026 fiscal year to come in around $43 billion. That's an impressive 65% increase from the prior year's Q1 sales of $26 billion.
Making the call between Oracle and Nvidia stocks
The strong financial performances Oracle and Nvidia are delivering, combined with customer demand for their products and services, mean choosing between the pair is a tough call.
One consideration is to look at their stock valuations using the forward price-to-earnings (P/E) ratio. This metric tells you how much investors are willing to pay for a dollar's worth of earnings based on estimates for the next 12 months.
Data by YCharts.
Nvidia's forward P/E multiple had been far higher than Oracle's, but plunged toward the end of January. The decline occurred after Chinese AI start-up DeepSeek shocked Wall Street on Jan. 27 with a reported lower-cost AI solution, prompting fears Nvidia's pricey products would see a drop in sales. This caused Nvidia's stock price to fall.
Now, Nvidia's forward P/E is close to Oracle's, meaning neither possess a significant advantage over the other from a valuation perspective. But it does mean Nvidia shares have become more reasonably priced at the time of writing.
This, combined with its new Blackwell platform, make Nvidia a compelling AI stock to buy. According to Nvidia CFO Colette Kress, Blackwell sales represented "the fastest product ramp in our company's history, unprecedented in its speed and scale."
The platform contributed $11 billion to Nvidia's $39.3 billion in Q4 revenue, and as a new product, Blackwell sales are just getting started. As a result, the company edges out Oracle as the better AI investment for the long term.
