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Economic Times
4 days ago
- Business
- Economic Times
The Magnificent Seven just lost Tesla and Apple - these 2 surging tech stocks are taking over fast
In a potential shake-up of the "Magnificent Seven" tech stocks, Tesla and Apple might be losing their spots to two rising stars: Oracle and Broadcom, as per a report. The shift's recommendation comes from Vimal Patel, manager of the Columbia Seligman Global Technology Fund, a fund that has outperformed its peers by six percentage points annually over the past five years, according to a report by Morningstar who holds an advanced degree in electrical engineering and has a background in the tech industry, is calling for an upgrade to the traditional list of mega-cap tech names, replacing Tesla and Apple with two companies he believes are better positioned for future growth, as per a report by Market Watch. Tesla has had an impressive run, but Patel thinks it's time to take a step back, according to the report. He points to growing competition in the electric vehicle space, especially from China, which is forcing Tesla into price cuts and squeezing margins, as per Market Watch said that, 'It's just a pricing war out there,' as quoted in the report. He's also skeptical about Tesla's long-term bets on robotaxis and humanoid robots, saying, 'We don't buy hopes and dreams,' as quoted by Market Watch. ALSO READ: Billionaires ditch Nvidia for this AI stock that's soared 2,000% since 2023 Apple remains popular with consumers, but Patel sees three key challenges. First, iPhone upgrade fatigue as he said, 'We have been waiting for an iPhone growth cycle, and we have not seen it,' as quoted in the report. Second, Apple's AI offerings haven't impressed and third, the company's exposure to China puts it at serious geopolitical risk, according to the Market Watch said that, 'Of all the Mag 7, they are the most exposed,' adding, 'They are not in a good position to navigate the tariff situation,' as quoted in the READ: Trump blasted for embarrassing typo in tariff letter — misgenders foreign leaderOracle has quietly become a strong competitor in the cloud space, especially through its Oracle Cloud Infrastructure (OCI) business, according to the report. Once known mostly for databases, the company is now gaining ground against Amazon Web Services, Microsoft Azure, and Google Cloud, as reported by Market said, 'They are becoming the next hyperscaler,' adding, "They are starting to show their chops,' as quoted in the report. In its most recent quarter, Oracle reported cloud revenue of $6.7 billion, up 27%, and total sales of $15.9 billion, an 11% increase, as reported by Market Watch. CEO Safra Catz expects cloud revenue to grow another 40% in the next year, as per the report. Oracle is also making strides in AI through Oracle 23 AI, which allows companies to run large language models directly on their private data, according to Market Watch. ALSO READ: VantageScore 4.0 just got a major boost - what it means for your credit and loans While Nvidia has dominated headlines, Broadcom is helping some of the world's biggest tech companies build custom AI chips, a cost-saving move gaining popularity among hyperscalers like Amazon, Google, and Microsoft, as reorted by Market Watch. Patel explained that, 'Instead of spending a ton of money on Nvidia chips, hyperscalers create their own chips made by Broadcom. This reduces costs and power requirements dramatically,' as quoted in the report. Broadcom's AI chip revenue rose 46% to $4.4 billion last quarter, helping total revenue reach $15 billion, as per the report. The company expects AI chip sales to climb to $5.1 billion in the next quarter, a 60% year-over-year jump, reported Market Watch. Broadcom is also a key supplier of networking and wireless chips, making it a crucial player in several areas of tech infrastructure, according to the Market Watch is recommending this change to the Magnificent Seven list?Vimal Patel, a seasoned tech investor and manager of the Columbia Seligman Global Technology Fund, which has outperformed its peers for years, as per the Market Watch report. Should I consider investing in Oracle or Broadcom now? While Patel sees long-term promise in both, always consider your risk tolerance and investment goals before making portfolio changes.
Yahoo
4 days ago
- Business
- Yahoo
ORCL's Cloud Database Gains Steam: Is it the Next Revenue Pillar?
Oracle ORCL has taken critical steps to advance its database capabilities. As the company experiences enterprise shifts from on-premise databases to the cloud, it anticipates cloud database services to become the third pillar for revenue growth. In the fourth quarter of fiscal 2025, cloud database services rose 31% year over year and now have annualized revenues of $2.6 billion as usage continues to grow. ORCL's launch of the Oracle 23 AI platform has enhanced enterprise functionality through secured training of business data with AI models. The company's flexibility to run its databases anywhere, with embedded AI and analytics via training of popular models, explains its growing popularity among enterprises seeking scalable and secure solutions globally. To further boost its database command, ORCL is actively migrating customers to its Autonomous databases, which are designed to be more self-managing and cost-efficient. This transition has been visible, as Autonomous database consumption revenues rose 47% on top of 27% growth reported last year. These initiatives are expected to drive cloud consumption, directly impacting top-line growth. ORCL's capital expenditure for fiscal 2026 is expected to exceed the $25 billion mark, with a focus on building 47 multi-cloud data centers. This infrastructure expansion is critical for supporting the surging demand for Autonomous databases and Oracle 23AI, as well as fulfilling the $138 billion in remaining performance obligations. Our model estimate for ORCL's fiscal 2026 cloud services and license revenues is pegged at approximately $52 billion, indicating year-over-year growth of 17.3%. Oracle is facing stiff competition from Amazon's AMZN AWS and Microsoft's MSFT Azure in cloud database services. Amazon's AWS is the leading provider of cloud infrastructure to enterprises. The company recently launched Nova Premier, a multimodal model designed to handle complex tasks like coding and natural language processing. Amazon plans to invest over $1 billion to build AI-enabled data centers in Ohio and Georgia, further strengthening AWS as a key profit driver for the company. Microsoft Azure commands a significant portion of the cloud space with its expertise in delivering scalable solutions across infrastructure, software and platforms. The company's presence in more than 70 announced Azure regions has strengthened its position, and Microsoft further plans to invest $80 billion in developing AI-focused data centers globally. ORCL's shares have appreciated 43.3% in the year-to-date period, outperforming both the Zacks Computer and Technology sector's return of 7% and the Zacks Computer-Software industry's growth of 16.4%. Image Source: Zacks Investment Research Oracle trades at a three-year EV/EBITDA of 28.69X, substantially above the industry average of 20.07X. ORCL has a Value Score of F. Image Source: Zacks Investment Research The Zacks Consensus Estimate for ORCL's fiscal 2026 earnings is pegged at $6.71 per share, which has remained steady over the past seven days. This indicates an 11.28% increase from the figure reported in the year-ago quarter. Oracle Corporation price-consensus-chart | Oracle Corporation Quote ORCL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report Oracle Corporation (ORCL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
