Alright, let's get into Nvidia and Oracle, shall we? Everyone's buzzing about AI, and these two are right in the thick of it. But are they both worth the hype? As usual, let's look at the numbers.
Nvidia's growth is, frankly, insane. Fiscal third-quarter revenue up 62% year-over-year to $57 billion. And data center revenue, which is their AI bread and butter, jumped 66%. Jensen Huang, Nvidia's CEO, is talking about "three massive platform shifts." That sounds impressive, doesn't it? But is it just marketing spiel?
Nvidia: Beyond the Hype
Let's drill down. Nvidia's market cap is sitting pretty at $4.4 trillion. That's a hefty price tag. Their gross margin for the last quarter was 73.4%, converting a huge chunk into free cash flow -- $22.1 billion, up from $13.5 billion the previous year. The stock is trading at a price-to-earnings ratio of 45. Okay, so they're making money hand over fist. But here's the question: Is this sustainable, or are we looking at a bubble waiting to burst? Better AI Stock to Buy Right Now: Nvidia vs. Oracle
Oracle, on the other hand, is playing a different game. Their revenue growth isn't nearly as explosive, only 12% year-over-year. But their cloud revenue is up 28%, which is nothing to sneeze at. And here's where it gets interesting: their remaining performance obligations (RPOs) have skyrocketed 359% to $455 billion. That's a massive backlog.
Oracle's CEO, Safra Catz, mentioned signing four multi-billion-dollar contracts in a single quarter. Astonishing, as she puts it. The stock trades at a similar valuation multiple to Nvidia, around 46 times earnings. So, both companies are expensive, but for different reasons.
Now, here’s my personal aside. I’ve looked at hundreds of these earnings reports. Oracle's RPO jump is unusual. What's driving it? Is it genuine demand, or are they offering sweetheart deals to lock in customers? Details on the specific terms of these contracts are, unsurprisingly, scarce.
Oracle: The Cloud Gamble
Let's compare apples to slightly different apples. Nvidia is already delivering the goods. They’re the undisputed king of AI chips. Oracle is promising future growth based on a growing cloud infrastructure business. It's a gamble, no doubt. But could it pay off?
The article suggests Nvidia is the "safer" bet. I disagree. "Safer" is relative here. Investing in any company at the forefront of a tech boom is inherently risky. It's like trying to predict the weather five years out. The variables are too numerous.
Speaking of risk, the article mentions Nvidia's dependence on a handful of large customers. This is a HUGE red flag. If one or two of those whales decide to switch suppliers, Nvidia's revenue could take a nosedive. We're talking about a potential 20-30% drop—or to be more exact, it is difficult to give a precise estimate without knowing the exact revenue concentration figures.
The author of the source article seems to have glossed over a crucial point: "This Cookie Notice explains how NBCUniversal and its affiliates (“NBCUniversal” or “we”), along with our partners, including advertisers and vendors, use cookies and similar tracking technologies when you use our websites, applications, such as games, interactive TV, voice-activated assistants, and other services that link to this policy, as well as connected devices, including those used in our theme parks (“Services”)." (reported in another article) Why is this relevant when discussing Nvidia and Oracle? It shows the pervasive nature of data collection and the infrastructure required to support it, which both companies are deeply involved in. It's a subtle reminder that the AI boom is built on a foundation of data, and that foundation is increasingly under scrutiny.
Data Doesn't Lie, But It Can Be Misleading
Nvidia is the clear leader right now. Their numbers are undeniable. But their high valuation and dependence on a few key clients make them a risky proposition. Oracle is the underdog, betting on the cloud. Their RPO growth is impressive, but it's still just potential. Ultimately, both companies are expensive and risky. Choose wisely, and don't believe the hype.
So, What's the Real Story?
Nvidia's dominance is real, but its sustainability is far from guaranteed.