Oracle’s stock has been on the rise in the midst of the artificial intelligence (AI) frenzy of 2023, but is it truly deserving of its gains? While Oracle’s stock has increased by 40% year to date, matching its competitor Microsoft, there are several reasons why investors should think twice before jumping on the Oracle bandwagon.
One of the main differentiators between Oracle and Microsoft is their involvement in the AI space. Microsoft has made significant investments and partnerships in the AI field, including an exclusive computing partnership with OpenAI, the company behind the ChatGPT tool. Microsoft also recently invested $10 billion in OpenAI, solidifying its commitment to AI innovation. In contrast, Oracle has signed a non-exclusive deal with a smaller generative AI specialist called Cohere. While Cohere boasts a talented team of AI researchers, it still pales in comparison to the partnership between Microsoft and OpenAI, which has a significant head start.
Furthermore, Oracle missed an opportunity to collaborate with Alphabet, the parent company of Google and a leader in AI technology. However, a longstanding legal dispute between Oracle and Google over the use of Java programming concepts in Android hindered any potential collaboration. This lack of partnership with a prominent AI player like Alphabet further highlights Oracle’s lower-grade AI ambitions.
Even without considering AI, Oracle’s position in the market is still overshadowed by Microsoft. Oracle is currently grappling with open-source database options led by MongoDB, PostgreSQL, and ElasticSearch. In fact, MySQL, which Oracle acquired in 2009 as part of the Sun Microsystems buyout, is losing market share to these competitors. Oracle’s management, seemingly detached from the open-source philosophy, has struggled to maintain the vitality of projects like MySQL, Java, and OpenOffice, further undermining its potential for growth.
Given these factors, it becomes apparent why Microsoft emerges as the more promising investment option. Its consistent business growth, coupled with its strong foothold in AI and successful management of open-source database competition, positions Microsoft far ahead of Oracle. Therefore, it is difficult to justify investing in Oracle when a superior alternative like Microsoft exists.
In conclusion, while Oracle’s stock has experienced significant growth, it may not be the wisest investment choice compared to Microsoft. Oracle’s limited involvement in the AI space and struggles with open-source competition make it difficult to overlook the more favorable prospects offered by Microsoft. As the AI era continues to unfold, investors should carefully consider their options and weigh the potential returns before making any investment decisions.
