Amazon says it is selling cloud capacity as fast as it can install it.
Oracle is leveraging its large installed base of customers and investments in AI infrastructure to deliver strong growth for investors.
Artificial intelligence (AI) remains a compelling opportunity in 2026. This is increasingly looking like the defining technology of the 21st century, as IDC expects AI to add $22 trillion in global economic impact by 2030.
Despite the powerful tailwinds driving investment in this incredible technology, many leading tech stocks are trading at surprisingly modest valuations relative to their profitability and growth. If you have an extra $1,000 you can commit to a long-term investing plan, here are two to consider buying.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
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Amazon (NASDAQ: AMZN) may be best known as the world's leading online retailer, but the company is also riding powerful AI tailwinds. More businesses are turning to cloud computing to use their proprietary data with AI to build models and agentic software -- and Amazon Web Services (AWS) remains the leader in that market.
AWS closed 2025 with momentum. Revenue growth accelerated to 24% year over year, up from 20% in the prior quarter, marking its fastest rate of increase in three years.
What stands out is that Amazon is still struggling to keep up with demand -- which means it could be leaving some revenue on the table. "Customers really want AWS for core and AI workloads, and we're monetizing capacity as fast as we can install it," CEO Andy Jassy said on the company's fourth-quarter earnings call.
That suggests AWS growth could accelerate further as Amazon brings more capacity online. This matters for investors because AWS generated 57% of Amazon's operating profit last year, making growth in this segment a major long-term catalyst for the stock.
While there are risks from competition with other cloud leaders like Microsoft and Alphabet, Amazon offers compelling value relative to its growth. Amazon's operating cash flow surged to $139 billion last year, bringing its price-to-cash flow multiple to its lowest level in over a decade, around 16.
Oracle (NYSE: ORCL) is also benefiting from rising cloud demand. The company is a leader in enterprise software, offering database management services that businesses have relied on for years. While Oracle was late to the AI cloud opportunity, it's now leveraging its large installed customer base and expanding AI capabilities to drive meaningful growth.
In the most recent quarter, Oracle's cloud revenue grew 34% year over year. Even more impressive, its cloud infrastructure business -- where much of the AI-related demand shows up -- delivered 68% year-over-year growth.
Enterprises are increasingly choosing Oracle for AI cloud services because of its focus on security and high-performance computing. Oracle provides the systems companies need to build AI models using sensitive, private data, and its database relationships make that transition easier for existing customers.
Oracle's remaining performance obligations (contracted revenue not yet recognized) jumped 433% year over year to $523 billion -- a massive opportunity compared to trailing revenue of $61 billion.
The risk is that Oracle could fall short in fulfilling that backlog. But that scenario appears reflected in the valuation. Shares trade at about 19 times forward earnings estimates, even though analysts project nearly 22% annualized earnings growth over the next several years. This makes Oracle a relatively attractive value among large-cap tech stocks right now.
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John Ballard has positions in Amazon and Oracle. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Oracle. The Motley Fool has a disclosure policy.