Despite my general bullishness towards Oracle Corporation (NYSE:ORCL), the vaunted company has an image problem. The worst part is that it’s not Oracle’s fault. In a young industry such as cloud computing, youth, apparently, is paramount. So, ORCL stock being one of the oldest dogs in the competition doesn’t help matters.
For now, investors can breathe a little easier. I reaffirmed my optimism for Oracle stock at the beginning of this year. While it’s far too early in 2018 to start rejoicing, initial signs are encouraging. Since its January open, ORCL is up nearly 6%. That’s nothing to scoff at, especially for a two-week performance.
Still, we have to recognize that, in the technology sphere, youth rules. Companies like Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) were established in the 1990s. Oracle was born in the 1970s and ORCL stock started trading in the 1980s. In tech, much like figure skating, these stats put one in the geriatrics club.
I understand Silicon Valley’s age bias. But in the business world, youth can quickly transition (painfully) into inexperience and hubris. Just participating in an innovative sector isn’t enough — you have to know what you’re doing.
This is one of my primary arguments for owning Oracle stock. Anyone can appreciate Amazon’s verve to take on new challenges at the drop of a hat. If you’ve been watching TV lately, you know that AMZN has been pushing its AWS cloud platform. But what, really, is Amazon’s experience in this arena?
Oracle has its faults, and they do things unconventionally. Big deal. What I’m more concerned about is whether or not the company can back up its hype. Time has shown consistently that it can, which is why I’m sticking with ORCL stock.
Meaningful Solutions Boost Oracle Stock
In my view, the markets are placing a premium on cloud competitor’s optics. From that perspective, the sexy names, such as Amazon AWS and Google Cloud Platform, stand out. But there’s a huge difference between winning the marketing battle and winning the war.
Admittedly, ORCL stock isn’t suited for the 100-meter dash. What it is suited for is the marathon. At the beginning of this month, I wrote the following:
I think it’s quite telling that AT&T Inc. (NYSE:T) was drawn in by Oracle’s comprehensive package, which brings software, platform, and infrastructure under one umbrella. Winning in the cloud isn’t just about raw numbers; you have to look at who you’re bringing in. I’m confident in Oracle stock because they’re pulling in the whales, not just Joe from down the street.
I’m not the only one that has this opinion. ORCL is built primarily for top-tier businesses, which means its services can handle everything below that elite category.
For instance, Forbes contributor Bob Evans notes that highly regulated industries (i.e. financial services, pharmaceuticals, etc.) want cloud computing’s benefits, but they also need to have those benefits based in their own data centers. The company’s Oracle Cloud Machine allows these regulated companies to do exactly that.
But Oracle founder Larry Ellison provides perhaps the best argument for ORCL stock. When an analyst asked about growing cloud competition, Ellison retorted that the competition utilizes Oracle services! Referring to Amazon and salesforce.com, inc. (NYSE:CRM), he stated: “Our competitors who have no reason to like us very much continue to invest in and run their entire business on Oracle.”
Nothing Beats ORCL Stock as a Pure Cloud Play
A difficult task to accomplish in the tech sector is discerning what’s real and what’s noise. While I love Amazon and Alphabet, I love them for different reasons. Sure, their cloud solutions are impressive, but they also cater to a different crowd.
The fact that you see AWS commercials is proof-positive of this dynamic. You’re not going to see Oracle desperately hawk its cloud umbrella in a Super Bowl ad. As the recording artist Ice-T might say, real O.G.s don’t need silly advertisements; they already know what’s up.
Indeed, the real O.G.s are clamoring for Oracle’s proven track record for delivering all-encompassing solutions. Even the fiercest cloud competitors quietly endorse the company’s position on the throne. If that doesn’t get you excited about Oracle stock, nothing will.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.