Microsoft (MSFT) and Oracle (ORCL), two major enterprise tech companies, have both fallen in 2026 as investors remain concerned about the high cost of building AI infrastructure. While the pullback has raised concerns, this drop might be a rare chance to buy these stocks “at a discount.” Using TipRanks’ Stock Comparison Tool, we take a closer look at both names to see which stock looks more attractive from the current levels.
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Microsoft Stock (MSFT)
Microsoft is down about 14% year-to-date, mainly due to concerns around heavy AI spending and slightly slower cloud momentum. The company is investing roughly $37.5 billion per quarter to expand its data center capacity.
Despite this, its core business remains strong. The company has a massive $625 billion backlog of contracted revenue, which provides strong visibility and supports future growth. At the same time, the stock is now trading at around 23x forward earnings, below its historical average, making it relatively cheaper after the pullback.
Looking ahead, MSFT will report its Q3 FY26 results after the market closes on Wednesday, April 29. Wall Street remains upbeat, with analysts expecting MSFT to report EPS of $4.05 on revenues of $81.29 billion.
Is MSFT a Buy Ahead of Earnings?
Heading into the Q3 print, Baird analyst William Power cut his price target on MSFT to $500 from $540 but maintained an Outperform rating. He noted that sentiment has turned cautious due to concerns around Microsoft’s software business and rising AI competition, but expects solid Copilot adoption, steady Azure growth, and earnings strength to help ease worries. While some investors are waiting for a clearer pickup in Azure, he sees the current valuation as attractive given the company’s steady growth and strong AI potential.
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 35 Buys and three Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average MSFT price target of $571.29 per share implies 39% upside potential.
Oracle Stock (ORCL)
Oracle stock has lost 12% so far this year, as investors worry about the cost of building out its AI infrastructure. However, the company is also seeing strong demand. The company recently reported strong Q3 results, with earnings coming in at $1.79 per share, beating the Street estimate of $1.70. Meanwhile, revenues rose 22% year over year to $17.19 billion, also ahead of expectations.
Its cloud business is growing rapidly, with AI-driven revenue expanding at a strong pace. The company’s backlog has climbed to $553 billion as of Q3 FY26, highlighting strong demand for its AI offerings. Oracle is also investing heavily to build out its infrastructure, including securing power capacity to support its data centers.
On the valuation front, Oracle trades at a P/E ratio of 27.89. While this is higher than Microsoft, it is actually a 33% discount compared to its average price over the last 12 months. This suggests that the recent sell-off has made a high-growth stock much more affordable.
This positions the company well for long-term growth, but also adds near-term risk due to higher spending and potential pressure on margins.
Is ORCL Stock a Good Buy?
Recently, Mizuho analyst Siti Panigrahi reiterated a Buy rating with a $400 price target, highlighting Oracle’s strong cloud setup. She said Oracle’s infrastructure is well-positioned to grow as companies choose to run AI on their existing data instead of moving it to new platforms. She also sees upside from its expanding full-stack strategy across cloud, database, and AI-driven applications.
Turning to Wall Street, analysts have a Strong Buy consensus rating on ORCL stock based on 27 Buys, six Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ORCL price target of $245.11 per share implies 44.34% upside potential.
Conclusion
Based on current data, Microsoft appears to be the more attractive pick for investors seeking stability. The stock offers a substantial 39% upside, carries a Strong Buy rating, and trades at a more reasonable 23.1 P/E. Its higher Smart Score of 8 suggests a better chance of outperforming the market, backed by its massive $625 billion backlog.
In comparison, Oracle offers a higher potential upside of 44% and also holds a Strong Buy rating. However, with a higher P/E of 27.89 and a lower Smart Score of 7, it carries more risk. While Oracle’s rapid cloud growth is impressive, its heavy infrastructure spending makes it a more volatile play than Microsoft.