Two AI beneficiaries just posted eye-catching updates. But which is the more attractive stock?
Shares of Broadcom (AVGO 0.19%) and Oracle (ORCL -5.05%) both ripped higher around earnings, with Oracle’s one-day surge among the biggest in decades. Broadcom, a chip and infrastructure-software company, continues to ride custom artificial intelligence (AI) accelerators and high-end networking. Oracle, the database and cloud provider, stunned investors with a massive jump in contracted work tied to AI demand.
The question for investors is which AI stock looks more attractive after these moves. Looking through the numbers and today’s prices, the edge goes to the company with faster AI growth in hand and a clearer path from bookings to revenue.
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Broadcom: strong execution, premium price
Broadcom’s most recent quarter underscored how central AI has become to results. In the third quarter of fiscal 2025 (the quarter ended Aug. 3), revenue rose 22% year over year to about $16 billion, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was 67%, and non-GAAP earnings per share was $1.69. Management also guided for fourth-quarter revenue of about $17.4 billion and said AI semiconductor revenue should climb to roughly $6.2 billion in the fourth quarter after growing 63% to $5.2 billion in the third. Free cash flow hit $7.0 billion, or 44% of revenue.
Summing the last four reported quarters puts Broadcom’s trailing-twelve-month non-GAAP earnings per share at about $6.29. At the stock’s price at the time of this writing, near $365, the stock trades around 58 times that trailing-12-months (TTM) figure — rich even after factoring in Broadcom’s breadth across AI accelerators, ethernet switching, and VMware-driven infrastructure software.
One key risk for Broadcom is that a large slice of near-term growth depends on just a handful of hyperscale customers, and cyclical pockets in legacy networking or storage can offset AI strength. Still, Broadcom‘s cash generation, dividend capacity, and guidance argue for durable fundamentals as AI builds out. The question is whether that durability is already priced in.
Oracle: bookings shock — and a new bar to clear
Oracle’s fiscal first quarter of 2026 (the quarter ended Aug. 31) changed the story. Revenue rose 12% to $14.9 billion, non-GAAP EPS increased 6% to $1.47, and — most importantly — remaining performance obligations (RPO) soared 359% to $455 billion on the back of four multi-billion-dollar AI agreements. Yes, you heard that right. Cloud revenue grew 28%, including 55% growth in infrastructure-as-a-service. Investors reacted in dramatic fashion, sending the stock up roughly 36% in a day.
In the company’s earnings release, CEO Safra Catz called it “an astonishing quarter,” adding that demand for Oracle Cloud Infrastructure is building and that more large contracts could follow. Management also previewed a multi-year framework for accelerating Oracle Cloud Infrastructure revenue growth tied to these wins. Momentum in the business is visible in the reported numbers and management’s commentary, but RPO is a commitment that must convert to usage; investors will need to see that flow through revenue and margins over time.
Trading at about $315 as of this writing, Oracle trades roughly 52 times TTM non-GAAP earnings — also expensive, but a discount to Broadcom on this basis. The stock’s violent move higher means execution against that towering backlog is now the key driver of returns from here.
Both companies are clear AI winners. Broadcom has revenue and cash flow already showing up from AI hardware and networking, plus a software portfolio that throws off steady cash. Oracle just unlocked a wave of contracted demand that, if it converts as management expects, could drive years of cloud infrastructure growth.
Choosing between them comes down to what is embedded in the share prices. Broadcom offers observable AI revenue today, but the stock carries a higher non-GAAP TTM price-to-earnings multiple. Oracle’s valuation is lower (though still elevated) and is now backed by a backlog that, if it turns into actual consumption, could reset the company’s growth profile. Given the trade-off — realized AI revenue at a steeper multiple versus massive contracted AI demand at a somewhat lower one — Oracle looks slightly more compelling for investors willing to accept the execution risk of turning record bookings into billable usage at healthy margins. Broadcom remains a high-quality AI play, but its premium leaves less room for error after the recent rally.
Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Oracle. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.