In a recent list of stock recommendations to diversify away from big tech and AI stocks, Oracle Corporation (NYSE:ORCL) was ranked fourth, prompting further analysis. Venu Krishna, head of U.S. equity strategy at Barclays, shared a group of stocks to balance risks associated with market concentration in major tech companies. Krishna advocates diversification outside the tech sector by identifying fundamental metrics that big tech stocks excel in and creating a portfolio to mimic their performance. This strategy led to a well-diversified stock portfolio aimed at offsetting market risk from big tech.
Krishna applied liquidity filters to focus on stocks with strong growth and FCF multiples while acknowledging the merits of big tech’s profit concentration. Despite underperformance compared to big tech in the past year and a half, Krishna’s stock portfolio outperformed the equal-weighted S&P 500 and market-cap-weighted S&P 500.
Looking at Krishna’s latest basket of stocks, Oracle Corporation stands out with 96 hedge fund investors. Oracle was added to the list to counterbalance technology concentration risks. Despite posting weak fiscal fourth-quarter results, Oracle’s cloud business showed strength with a 42% increase in IaaS revenue year-over-year. The company also announced significant partnerships with industry leaders like OpenAI, Microsoft, and Google.
Management’s positive outlook for the fiscal first quarter includes revenue growth between 6% to 8% in constant currency and adjusted EPS growth ranging from 11% to 15%. Oracle’s cloud services are poised for growth, with the company’s Forward P/E ratio of 22.03 looking attractive compared to peers. Madison Sustainable Equity Fund remains positive about Oracle’s position in generative AI workloads, highlighting its unique potential in the market.
Despite its potential, Oracle ranks fourth in Analyst Recommends 10 Best Stocks to Diversify Your Portfolio Away from Mega-Cap Tech and AI Stocks. While Oracle shows promise, AI stocks may offer greater potential for higher returns in a shorter period. For investors seeking AI stocks with significant growth potential, exploring cheaper options could be advantageous.
In conclusion, Oracle Corporation presents an opportunity for investors to diversify their portfolios and mitigate risks associated with big tech concentration. The company’s strong partnerships, growth prospects in the cloud market, and attractive valuation compared to peers make it an appealing option for investors looking to diversify beyond mega-cap tech and AI stocks.
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https://finance.yahoo.com/news/oracle-orcl-best-under-radar-131951789.html