Oracle Corp.'s Opportunity in Artificial Intelligence

UBS analyst Karl Keirstead believes that Wall Street may be underestimating Oracle Corp.'s potential in the field of artificial intelligence (AI). In fact, he has upgraded Oracle's stock to a "buy" from "neutral" due to what he sees as the company's "underappreciated edge" over its rivals.

One aspect of this edge is Oracle's graphics-processing-unit (GPU) capacity, especially during a time of supply shortages. According to Keirstead, Oracle is benefiting from larger allocations of Nvidia GPUs compared to its size, which could give it an advantage amid the current GPU shortage noise. Additionally, he points out that Oracle's Oracle Cloud Infrastructure (OCI) architecture also contributes to its competitive position.

Despite Oracle's stock already seeing a 2% rise in Tuesday morning trading, Keirstead believes that the AI story is far from over. He suggests that the company is just starting to witness AI startups utilizing OCI and expects this trend to continue. In fact, he feels that Oracle's upcoming CloudWorld event in mid-September may serve as a catalyst for further growth.

While some may argue that Oracle's stock is already priced too high, Keirstead disagrees. He sees the stock's 20-times price-to-earnings multiple as reasonable and even considers Oracle to be a contrarian play at this stage, as only 40% of sell-side analysts hold a bullish view on the company.

In conclusion, Karl Keirstead's upgrade of Oracle's stock and his optimism about its potential in the AI field suggest that there could be more room for growth and success for the company ahead.