Broadcom (AVGO 0.52%) and Oracle (ORCL +4.68%) just delivered exceptional earnings reports and guidance that sent both tech stocks to all-time highs. Over the last five years, Broadcom is up over 925% and Oracle is up over 475% -- outperforming every "Magnificent Seven" stock (Microsoft, Apple, Alphabet, Amazon, Meta Platforms, Tesla) except one -- Nvidia.
The "Ten Titans" provide an update to the Magnificent Seven by adding Broadcom, Oracle, and Netflix to the list. Combined, these three companies have nearly the same market cap as Apple, and are gaining increasing influence in the S&P 500 (^GSPC +1.46%). In fact, the Ten Titans now make up 39.1% of the index compared to 33.7% for the Magnificent Seven.
Beyond the market cap influence of these names, Broadcom and Oracle embody groundbreaking advancements in cloud computing, infrastructure software, and artificial intelligence (AI).
Here's why Broadcom and Oracle have become such dominant companies, and whether either growth stock is a buy now.
Image source: Getty Images.
Broadcom is a balanced way to invest in AI
Broadcom and Oracle's surging stock prices illustrate how AI is redefining previously stagnant investment theses. Just a few years ago, both companies were often viewed as dividend-paying stalwarts.
Broadcom was known for its established semiconductor business, providing the nuts and bolts behind networking, broadband, wireless, cybersecurity, and more. But the company is completely different today due to its acquisition of VMware in late 2023 and the development and adoption of its AI chips.
Cloud computing giants are lining up to buy Broadcom's AI chips, known as XPUs. XPUs are highly advanced application-specific integrated circuits (ASICs) that are tailored to a specialized function and are especially good at handling increasing AI workloads. Broadcom doesn't just design the chips, it also makes associated networking products, like Tomahawk switches that link chips within a server rack, and Jericho Ethernet fabric routers, which enable the connection of over 1 million XPU clusters across multiple data centers.
Broadcom is unique because it is far bigger than just an AI play. Rather, it is a highly diversified company that benefits from the buildout of AI infrastructure, AI software, and the growth of high-speed connectivity.
NASDAQ: AVGO
Key Data Points
Oracle is heavily disrupting incumbent cloud giants
Oracle's latest quarter perfectly represents why Broadcom has become a behemoth that is closing in on $1 trillion in market cap. On Sept. 9, Oracle said that its cloud infrastructure segment is expected to grow 77% in fiscal 2026, 78% in fiscal 2027, 128% in fiscal 2028, and 97% in fiscal 2029 to become a $144 billion business. If Oracle comes remotely close to these estimates, its cloud business will become far larger than its legacy database services segment.
Like Broadcom, Oracle was once an entrenched business-to-business giant in tech, known for its stodgy growth and reliable dividend. But Oracle is now a completely different company. Its strength comes from its competitive pricing model, which makes Oracle Cloud Infrastructure (OCI) a great add-on for customers that use its database services.
Oracle is an enterprise-facing company. Whereas investors in the "big three" cloud players, Amazon, Microsoft, and Alphabet, are getting a lot of moving parts that have nothing to do with cloud computing. In this vein, Oracle has become one of the best ways to invest in high-octane cloud growth, somewhat similar to how investors are drawn to Nvidia. Nvidia has become a pure-play AI stock because its data center business is now magnitudes larger than its gaming and professional visualization markets.
Broadcom and Oracle's stock prices are running up far faster than they are growing earnings because investors are buying these stocks for where they could be years from now rather than where they are today. Forward earnings estimates will probably increase as analysts adjust their targets based on recent results and guidance. But for now, Broadcom's forward price-to-earnings ratio is a staggering 54.8 compared to 48.2 for Oracle. For context, Nvidia's forward P/E is 39.5 -- meaning investors are even more excited about Broadcom and Oracle's growth.
NYSE: ORCL
Key Data Points
Broadcom and Oracle are moving markets
The breakneck growth rates and size of Broadcom and Oracle prove why it's time to forget the Magnificent Seven and use the Ten Titans as a better descriptor for market-moving growth stocks. Even folks who don't own the Ten Titans outright may be indirectly impacted through their holdings in index funds and exchange-traded funds.
In addition to their foundational role in the major indexes, the Ten Titans will likely make or break broader market sentiment. If the S&P 500 keeps making new highs, it's probably because of the Ten Titans. If it undergoes a major sell-off, it's probably because a few key Titans fell. You may have even seen headlines about how the S&P 500 is expensive relative to its historical valuation. That's because many of the Ten Titans are valued more for their future earnings than their current profits. So investors should only approach these stocks if they have a high risk tolerance, a long-term time horizon, and believe these companies can deliver on highly optimistic expectations.
It's also worth noting the correlation that these companies can have. For example, Oracle's blowout quarter sent Broadcom and Nvidia soaring on Sept. 10 because Oracle is a major customer of these chip makers. Increased AI spending to build out OCI benefits Broadcom and Nvidia. Although Oracle may account for less than 2% of the S&P 500, its results had a significantly larger impact on the S&P 500 than the movement in its stock price alone.
