Even Though Oracle Fell After Earnings, I'd Still Rather Buy It in December Over Every "Magnificent Seven" Stock (Except One)

By Daniel Foelber – Dec 12, 2025 at 7:50AMKey PointsOracle’s results are incredibly impressive.Oracle has a clear runway for future growth.Microsoft has a better risk/reward profile than Oracle.These 10 Stocks Could Mint the Next Wave of Millionaires ›NYSE: ORCLOracleMarket Cap$567BToday's Changeangle-down(-10.83%) $24.16Current Price$198.85Price as of December 11, 2025 at 4:00 PM ETInvestors are concerned that Oracle's spending is too aggressive.The "Magnificent Seven" stocks have captured the spotlight in recent years because their success has driven the S&P 500 to new heights. Recently, I ranked all seven of these stocks for 2026, with Microsoft (MSFT +1.04%) in first place, followed by Meta Platforms, Nvidia, Alphabet, Amazon, Apple, and Tesla. If Oracle (ORCL 10.83%) were in the Magnificent Seven, I would rank it ahead of Meta and right behind Microsoft, even after the growth stock got crushed following the release of its second-quarter fiscal 2026 results this week. Here's why. Image source: Getty Images. Investors are underestimating Oracle's transformation Oracle is getting significant attention of late for its cloud investments, which are purpose-built for high-performance computing. Rightfully so, as the company is growing faster than its competitors, securing massive deals. It has charted a clear path to become the largest cloud operator focused on artificial intelligence (AI) by 2031. Oracle has been a major player in database and enterprise software for decades. In the early 2010s, it began rolling out infrastructure-as-a-service, platform-as-a-service, and software-as-a-service solutions. In recent years, Oracle has transformed its business model through exponential growth in cloud computing, which now makes up half of total revenue.Advertisement However, cloud could soon become Oracle's dominant segment. In September, Oracle management forecast that Oracle Cloud Infrastructure (OCI) revenue in fiscal 2026 would reach $18 billion, growing to $32 billion in fiscal 2027, $73 billion in fiscal 2028 as the bulk of data centers come online, $114 billion in fiscal 2029, and $144 billion in fiscal 2030. ExpandNYSE: ORCLOracleToday's Change(-10.83%) $-24.16Current Price$198.85Key Data PointsMarket Cap$567BDay's Range$186.23 - $201.9952wk Range$118.86 - $345.72Volume1.2MAvg Vol26MGross Margin74.29%Dividend Yield0.96% Oracle is becoming the Nvidia of cloud computing If Oracle comes even remotely close to these targets, its trajectory will be eerily similar to Nvidia, which transformed from making chips for gaming, automobile, and professional visualization to data centers and networking. In Oracle's case, OCI would be the high-octane growth segment, while its legacy software business would be the stable cash cow. That potential alone is why Oracle is impossible to ignore. But the red flags are glaring. Oracle exited the recent quarter with non-current notes payable and other borrowings (which are basically long-term debt) of $100 billion, compared to cash and cash equivalents of $19.2 billion. In the first half of fiscal 2026, Oracle spent $20.54 billion on capital expenditures compared to $6.27 billion in the first half of fiscal 2025. That rapid spending ate into Oracle's free cash flow (FCF), which went from $2.18 billion in the first half of fiscal 2025 to negative $10.33 billion in the first half of fiscal 2026. And that's even after accounting for a 16.9% increase in operating cash flow. The best stock to buy for 2026 The primary reason Microsoft gains an edge over Oracle is that it offers a lower-risk yet potentially high-reward approach to investing in AI, cloud computing, software, gaming, and more. Unlike Oracle, which is burning through cash at a breakneck pace, Microsoft is generating its highest operating margins in a decade and has plenty of dry powder to fuel its long-term investments. It can even pull back on its stock buyback program if it wants to accelerate spending, or lean on its balance sheet, which has tons more cash, cash equivalents, and short-term investments than long-term debt. So while Oracle has arguably more upside potential than Microsoft, Microsoft stands out as a balanced buy for long-term investors.About the AuthorDaniel Foelber is a contributing Motley Fool stock market analyst with extensive experience covering the broader stock market and publicly traded companies across energy, industrials, utilities, materials, technology, communications, consumer discretionary, consumer staples, and financial stocks. Daniel looks for industry leaders offering compelling growth, value, or dividends to generate passive income. He has also written for energy trade publications and helped build oil and gas training modules. He holds a bachelor’s degree in finance and a certificate in personal financial planning from the University of Houston. He believes the best investors are those who focus on fundamentals, remain steady through volatility, and filter out market noise.TMFpalomino2Read NextDec 12, 2025 •By Timothy GreenOracle Stock Just Tumbled: Here's One Reason WhyDec 12, 2025 •By Jose NajarroWhy Oracle Stock Dropped After the Company Reported a Massive Increase in RPODec 11, 2025 •By Timothy GreenOracle's Debt Balloons to $108 Billion as AI Spending SoarsDec 11, 2025 •By Johnny RiceWhy Oracle Stock Is Plummeting TodayDec 10, 2025 •By John BallardWhat Is One of the Best Tech Stocks to Hold for the Next 10 Years?Dec 5, 2025 •By Bram BerkowitzFollowing Oracle?

Mark Your Calendars for Dec. 10.