The tech realm is akin to the Wild West – volatile, unpredictable, where fortunes are made and lost quicker than you can say “byte.” Last year saw the rise of the Magnificent Seven, a tech elite that outshone the rest. However, in 2024, the tides have turned for some. The once-untouchable Tesla finds itself teetering at the edge, sparking debates among Wall Street’s finest minds about its future in the elite club.

Tesla Tumbles: Eroding Foundations

Tesla, the brainchild of the enigmatic Elon Musk, has long been synonymous with innovation in the electric vehicle space. However, despite its ventures into AI-powered self-driving technology and robots, the core of its empire – electric vehicles – seems to be showing signs of strain.

In a bid to boost sales, Tesla slashed prices by a substantial 25.1% last year, a move that pummeled its earnings per share by 23% to $3.12. Such strategic acrobatics placed Tesla at a lofty price-to-earnings (P/E) ratio of 54.7, making it a pricier bet compared to its tech cohorts.

With Tesla’s growth trajectory stuttering and its once-phenomenal stock taking a plunge, the question arises: Is the sun setting on Tesla’s reign in the tech kingdom?

Oracle: The Rising Star

As Tesla grapples with its demons, a new contender emerges for a coveted spot in the Magnificent Seven – Oracle. Heralded as a titan in cloud computing, Oracle stands at the cusp of a revolution in AI infrastructure. Powered by Nvidia’s cutting-edge GPUs, Oracle’s Gen2 Cloud is a beacon for AI developers, offering unrivaled speed and cost efficiency.

Chairman Larry Ellison’s brainchild has captured the attention of the AI industry’s elite, with billions in commitments pouring in. Oracle’s ecosystem is expanding at a breakneck pace, with upgrades to existing data centers and the construction of a hundred more – an exponential leap forward for the tech giant.

Oracle Shines Bright: A Beacon in the Tech Storm

Oracle’s Oracle Cloud Infrastructure (OCI) segment is torchbearer, witnessing a meteoric 49% surge in revenue to $1.8 billion in the last quarter. Despite OCI accounting for a modest 13.5% of Oracle’s revenue, Chairman Ellison envisages a 50% growth for several years, painting a promising future for the segment.

What sets Oracle apart is its automated data center technology, a marvel in efficiency and scalability. Operating costs remain steady, regardless of scale, ensuring robust profitability. This streamlined approach, coupled with sharp cost management, propelled Oracle’s earnings per share by an impressive 25% to $0.85.

Oracle vs. Tesla: A Tale of Two Stocks

Amid the tumultuous tech landscape, Oracle’s stock has been a beacon of stability and growth, soaring by 22.8% in 2024. In stark contrast, Tesla finds itself mired in uncertainties, with a staggering 31% decline year-to-date. The divergence in their trajectories underscores the resilience of Oracle in the face of adversity.

As the tech saga unfolds, Oracle stands as a testament to adaptability, innovation, and resilience – qualities that set it apart in a realm where fortunes are made and lost in the blink of a digital eye.

Oracle’s Current Standing

Oracle predicts its earnings per share will hit approximately $5.59. This would position Oracle stock at a P/E ratio of 22.8, significantly lower than Tesla’s P/E ratio. In addition, Oracle’s P/E ratio sits at a 27% discount to the Nasdaq-100 index, indicating that Oracle is one of the cheaper options among its big tech peers.

Record-Breaking Performance

Oracle’s bookings surged to an all-time high of $80 billion during Q3, marking a substantial 29% year-over-year increase. Notably, bookings grew much faster than the company’s revenue in that quarter, suggesting potential acceleration in Oracle’s top line in the near term.

Potential Upside

With Oracle’s attractive valuation, rapid growth in OCI, and sizeable bookings backlog, the company’s stock appears primed for several years of positive performance. Sitting at a valuation of $351 billion currently, Oracle is projected to achieve a $1 trillion valuation within the next decade.

Key Considerations

Before considering an investment in Oracle, it’s essential to note that the analyst team at Motley Fool Stock Advisor identifies Oracle not as one of the top 10 stocks for investors right now, although the potential for robust returns remains. The service provides valuable insights, portfolio-building guidance, analyst updates, and two fresh stock picks monthly, significantly outperforming the S&P 500 since 2002*.

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