Investor expectations for AI’s performance have slid in recent weeks. That’s amid the rise of new AI programs such as China’s DeepSeek, which claims to use fewer resources, and amid a growth scare in the general market.
Either way, the AI trend is still on track to grow, irrespective of the price and valuation of many tech stocks. But it’s also a sign that investors should focus on AI-adjacent opportunities right now instead.
One such opportunity? Cloud services. AI demand will keep cloud services growing strong, but it’s already a high profit-margin business for many tech firms.
One player inking major deals now is Oracle (ORCL). They’ve been shifting their business to a recurring revenue model, and moving towards catering to AI demand.
The recent selloff has taken shares down 15% year-to-date, back near support levels around $140.
At these prices, Oracle is fairly valued around 21 times earnings, specially with earnings growth in the low 20% range over the past year.
Action to take: Investors may want to accumulate Oracle shares near today’s prices, and use any further market weakness to add to that position. At current prices, Oracle pays a 1.1% dividend.
For traders, shares are oversold in the short-term and look ready to bounce in the coming weeks. The April $155 calls, last trading for about $2.60, could see mid-to-high double-digit returns in the coming trading days. Traders should look to take quick profits.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.