Ibm Vs Oracle Stock

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Ibm Vs Oracle Stock

IBM Vs. Oracle: Which Is Better Cloud Computing Stock?

Oracle was trying to become a $1 trillion company in the past. However, it didn't go well, and the stock price declined by 40% in the last year.

A quick look at IBM shows it is also not doing well. Despite the lackluster performance, both companies are trying to ride the AI tailwinds.

Both Stocks Are Available At A Discount

With both stocks available at a dip, it is normal to ask which stock to pick. The data shows Oracle stock is the best option in comparison with IBM.

Oracle and IBM earn most of their revenue from cloud computing. In Q1, IBM's cloud revenue was up by 13% y/y. The overall revenue growth of IBM was near 9%.

On the other hand, Oracle's revenue from the cloud segment is up by 47% y/y in Q4 FY2026. Around 50% of the cloud revenue came from the cloud infrastructure segment.

The total backlog of Oracle is now sitting at $638 billion. However, most of it depends on OpenAI. ChatGPT's parent company signed a 5-year deal that's worth around $300 billion.

This means around 50% of Oracle's backlog is coming from OpenAI. It is worth noting that RPO only converts into revenue if the customer actually pays.

IBM Z is a product from IBM and consists of mainframe computers. Its USP is zero downtime, which makes it very important for AI inference. To give you some perspective, one machine can easily handle 1 million transactions in 1 second.

So, it is clear that IBM Z is very important for the AI infrastructure. That's a key reason why the revenue from this business is up by 51% y/y. This also shows that IBM has other things going for itself while Oracle is still heavily tied to cloud computing.

But for now, IBM Z is still very small in terms of numbers. This means its impact on IBM's overall business will stay small in the near future.

If we look at Oracle, it has also ventured into other businesses. The revenue from the services and hardware is up by 13% and 9% y/y, respectively.

So, which stock is the better pick? Both are good, but Oracle is the better option in terms of valuation. The P/E ratio of Oracle is 25. On the other hand, the P/E ratio of IBM is 26.

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