Why NVIDIA and Oracle Are AI Leaders to Buy Despite Market Volatility

The AI revolution is reshaping the tech landscape, and no two companies exemplify this transformation better than NVIDIA and Oracle. Both are pivotal drivers of the S&P 500's AI surge, yet their stocks face near-term headwinds from macroeconomic risks and valuation skepticism. This analysis explores why they remain compelling buys for long-term investors, despite volatility.

NVIDIA: The AI Infrastructure Monolith

NVIDIA's dominance in AI chips is unchallenged, with an ~80% market share in GPU sales for AI training and inference. Its Blackwell architecture, a hybrid of GPU, CPU, and DPU technologies, delivers 3-5x more AI throughput than prior generations, positioning it as the gold standard for cloud providers and enterprises.

Financial Highlights:
- Q2 2025 revenue hit $30.0 billion, with Data Center revenue soaring to $26.3 billion (+154% YoY).
- Analysts now project FY2026 Data Center revenue at $168 billion, up from $144 billion earlier.
- The $50 billion share buyback underscores confidence in its capital allocation strategy.

Growth Catalysts:
- Blackwell's Scalability: Its NVL72 system (72 GPUs operating as one) is already driving “several billion dollars” in revenue, with adoption by Fortune 100 firms and sovereign projects like Japan's ABCI 3.0.
- CUDA Ecosystem Lock-In: Over 150 companies integrate NVIDIA's AI tools (e.g., NIM microservices), creating a defensible moat against AMD and Intel.

Valuation Metrics:
- Forward P/E of 23x–44x reflects diverging views, but relative to its 122% YoY revenue growth, the stock remains attractive for growth investors.

Oracle: The Cloud and AI Workhorse

Oracle's transition from a legacy software firm to a cloud-and-AI powerhouse is now undeniable. Its $30 billion+ FY28 cloud contract (accounting for 65% of projected IaaS revenue) and OCI Gen II platform are key growth engines.

Financial Highlights:
- Cloud revenue now represents 50% of total software revenue, with +40% FY2026 growth guidance.
- Bernstein upgraded its target to $269, citing Oracle's shift to a “growth stock” with 100%+ RPO growth.

Growth Catalysts:
- AI Infrastructure Validation: Leasing 4.5 GW of data center capacity to OpenAI signals confidence in its scalability for generative AI workloads.
- Strategic Back Office Businesses: Its databases and enterprise software remain mission-critical for global enterprises, providing a stable cash flow base.

Valuation Metrics:
- A forward P/E of 20.2–22.2 aligns with the S&P 500 average, making it a cheaper AI play compared to pure-play cloud providers.

Why Buy Now? Growth Outweighs Near-Term Risks

Both stocks face headwinds:

1. Trade Tensions: U.S.-China tech conflicts and tariff uncertainties could delay semiconductor shipments.
2. Margin Pressures: NVIDIA's Data Center margins dipped to 78% (from 84%) due to product mix shifts.
3. Overvaluation Concerns: NVIDIA's P/E is near historical highs, while Oracle's stock dipped post-earnings on macro fears.

However, long-term tailwinds dominate:

• AI's Economic Impact: Analysts estimate AI could add $15–$16 trillion to global GDP by 2030, with NVIDIA and Oracle at the core of infrastructure and software delivery.
• S&P 500's Reliance on AI: The “Magnificent 7” (including both firms) drive 70% of S&P 500 returns since 2023. Their success is tied to broader market health.

Investment Thesis: Buy the Dip, Hold for the Surge

• NVIDIA: Despite post-earnings dips, its Blackwell-driven revenue ramp and CUDA ecosystem dominance justify a hold rating. Investors should target dips below $220 (current price ~$250) for entry.
• Oracle: Its cloud momentum and $30 billion contract make it a safer bet for investors wary of NVIDIA's volatility. The $269 price target (Bernstein) leaves 8% upside.

Final Take

NVIDIA and Oracle are not just beneficiaries of the AI boom—they're its architects. While macro risks and valuation debates will cause short-term volatility, their structural advantages in AI infrastructure, enterprise software, and cloud growth make them buys for investors with a 3–5 year horizon.

For conservative investors, dollar-cost averaging into both stocks during dips is prudent. Aggressive investors might consider NVIDIA for its growth upside, paired with Oracle as a balance of stability and AI exposure. The AI era isn't slowing down, and these two stocks are set to lead the charge.

Investment advice disclaimer: This analysis is for informational purposes only. Always conduct your own research or consult a financial advisor before making investment decisions.