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The Better Investment: Microsoft vs Oracle

Investment, referred to by most as the game of pure luck depends on many other aspects besides luck. While luck does play a key role in an investor’s life, the knowledge of the market and understanding the ‘stock trends’ are two other key factors that help investors enjoy high returns.

Even though there are many different investment options, most people tend to invest in stocks. As the world today is driven by technology, the smartest approach is to choose tech companies for investment. And when it comes to tech company stocks, there is no better option than Microsoft and Oracle.  

Microsoft, founded by the renowned Bill Gates, is one of the leading tech companies in the world. Bestowing upon the world useful tools such as Microsoft Office, this company has been on the rise ever since its inception. While this company rules the world of microcomputer software, another company is making its way to the top in the tech world.

Oracle, founded by Larry Ellison, Bob Miner, and Ed Oates, came into the picture almost seven years after the establishment of Microsoft. The growth of this company was relatively slow, comparatively. But as it completed its merger of NetSuite and stepped into the world of cloud Enterprise Resource Planning (ERP) software, things have changed.

While both these companies are renowned, choosing which stocks to invest in can be overwhelming.

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Choosing the Right Stocks

Many people have believed, for decades, that no other tech company specializing in microcomputer software will ever be able to reach the level where Microsoft stands. That is why investing in Microsoft stocks was seen as the most lucrative option. But the world is ever-evolving. Things are changing across every sector in the world.

Other tech companies are gradually making their way to the top, including Oracle. To many, the Oracle stocks were just cheap options – until now – as its stocks increased by 50%, while Microsoft’s stocks increased by 40%. It can be said that many people underestimated Oracle stocks, and probably many are now regretting that.

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Both Microsoft and Oracle are making strides in the cloud. It is one of the key technologies in the market today. Every business is transitioning into the digital landscape, and cloud computing is one of the greatest tools to gather data and make it accessible anywhere and anytime.

Microsoft Azure comes second in terms of popularity to Amazon Web Services (AWS). Even though the transition of Microsoft to the cloud was loud and much more visible, Oracle came as a silent competitor. The initial growth in the cloud was rather slow, but when it launched Oracle NetSuite ERP and Fusion ERP, things begin to change.

Yes, Microsoft is growing at a fast rate. In just the first few months of fiscal 2021, this company’s earnings touched 35% year-over-year growth while the revenue increased by 16%. In comparison to Microsoft, Oracle, during the same period, enjoyed a 2% growth in revenue and 18% year-over-year growth. Throughout all quarters, the company has grown. Even though the growth is not as rapid as that of Microsoft, analysts predict that its revenue will increase by 3% while this company may enjoy an 18% growth in its earnings.

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Many investors lay down a counterargument stating that the growth is slow, but they fail to realize that the Oracle stocks are much cheaper than that of Microsoft that too at a forward earning of 17%. Not only this, but these stocks also enjoy a 1.6% dividend yield.

The Verdict

A year ago, investors said that Microsoft stocks are better investment options, but today, the story is a bit different. Yes, the stock market is unpredictable, and things are continuously changing, but Oracle is the better option for now!

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