For those who occur to often put money into the stock market, you’ve got probably come across the phrase “sell in May and go away.” The adage came about when investors realized the six-month period between May and October often delivers weaker returns than the six-month period from November to April.
Seasonality is one among the just about definitely causes of the disparity. There is usually less trading activity in the warmer spring and summer months, because Wall Street bankers and fund managers are away on vacation like everybody else.
Based on the Corporate Finance Institute, the S&P 500 index has delivered a median return of two% in the middle of the May-to-October period every 12 months since 1945, as compared with a 6.7% gain from November to April. That may be a considerable difference, so with May just a few weeks away, must you sell your stocks?
Absolutely not. To start out with, you might be actually higher off buying stocks in May considering they’ll likely deliver a positive return based on the above information. Second of all, it is usually best to take a long-term approach to investing by assessing opportunities based on a period of 5 or 10 years. With that in mind, here’s why it’s best to think about buying shares of Oracle (NYSE: ORCL) and Uber Technologies (NYSE: UBER) today.
1. Oracle is one among essentially the most cost effective ways to play the factitious intelligence (AI) boom
Oracle was founded in 1977 so it has survived its fair proportion of Mays and, in fact, its stock price is currently near an all-time high. The company helps businesses shift into the digital age, whether it was through its original database management systems a few years ago, or its current portfolio of cloud applications and data center infrastructure.
Data center infrastructure has been a core focus for Oracle through the last couple of years, for the reason that rise of artificial intelligence (AI) is fueling significant demand for computing power amongst developers. Oracle Cloud Infrastructure (OCI) is currently upgrading its 66 existing data centers to support AI with recent graphics processing chips (GPUs) from suppliers like Nvidia, nevertheless it’s also constructing 100 more.
Oracle chairman Larry Ellison says the company’s GPU cluster technology allows developers to construct generative AI models twice as fast and for half the associated fee of competing infrastructure. In consequence, demand for OCI’s Gen2 Cloud capability is soaring from leading AI start-ups like Cohere and Elon Musk’s xAI. In actual fact, CEO Safra Catz recently said Oracle has on the very least 40 recent AI bookings price over $1 billion each, which haven’t even come online yet because they’re waiting for brand recent data centers to be built.
Oracle generated $13.3 billion in total revenue in the middle of the recent fiscal 2024 third quarter (ended Feb. 29), which represented a 7% year-over-year increase. Nevertheless, while OCI only accounted for $1.8 billion of that revenue, the segment grew by a strong 49%. Ellison believes OCI will grow by 50% for years to return back on the back of surging demand for AI.
The AI bookings I discussed earlier support that, and thru Q3, Oracle’s total bookings soared 29% to a record-high $80 billion, which suggests an overall acceleration in revenue growth is more likely to be on the horizon.
Oracle’s fiscal 2024 12 months will wrap up in May, and Wall Street analysts predict the company’s earnings per share will land at $5.59. That places Oracle stock at a price-to-earnings (P/E) ratio of 21.2, which is 31% cheaper than the 30.8 P/E ratio of the Nasdaq-100 technology index. Subsequently, this stock looks like a terrific buy regardless of the time of 12 months.
2. Uber is a long-term bet on autonomous technologies
Uber operates the most important ride-hailing platform on the planet, nevertheless it also runs a dominant food delivery service and a growing business freight network. The company is about to profit significantly from AI over the long term, because it paves the best way during which for autonomous self-driving vehicles.
Uber accepted $137.8 billion in bookings from its 150 million monthly energetic platform customers during 2023. That figure includes all the dollar value of every ride, every food order, and every freight order. Around 6.8 million monthly energetic drivers are working inside its ecosystem to satisfy those orders, they typically earned $62 billion all 12 months long.
Uber is a platform company, so its job is to connect people and collect a fee for doing so. Subsequently, after stripping out what it paid to drivers and restaurants, as an illustration, the company’s $137.8 billion in bookings translated to $37.2 billion in revenue. But what if Uber could eliminate the associated fee of its drivers through using autonomous vehicles?
Theoretically, it could lead to $62 billion in additional revenue (less any fees owed to the owners and developers of said vehicles). Even when the company split the savings with its customers by slashing prices, it’d still be billions of dollars higher off.
Uber has already inked loads of partnerships on that front. Customers in Phoenix, Arizona, can hail a self-driving ride through Uber today, which is serviced by Alphabet‘s Waymo autonomous vehicles. The company also has a 10-year address Motional, a 3 way partnership between Aptiv and Hyundai that has developed an electrical self-driving automotive. Uber also owns equity stakes in autonomous technology corporations Aurora and Joby Aviation.
Uber is clearly preparing for an autonomous future, even when it’s more likely to be a decade (or more) away. But investors don’t have to bank on that to buy the stock today — it has soared 126% over the past 12 months, and an analyst from Jefferies Research thinks it could jump one other 39% to realize $100 in the next 12 months or so.
Uber has matured beyond its days as a disruptive tech start-up. The company is now profitable, having delivered $2.1 billion in net income during 2023, which paved the best way during which for its admission into the celebrated S&P 500 index. Buying this stock is a bet on a growing business with significant untapped long-term potential due to AI and autonomous technologies.
Must you invest $1,000 in Oracle right away?
Before you buy stock in Oracle, consider this:
The Motley Idiot Stock Advisor analyst team just identified what they consider are the 10 best stocks for investors to buy now… and Oracle wasn’t one among them. The ten stocks that made the cut could produce monster returns within the approaching years.
Consider when Nvidia made this list on April 15, 2005… within the event you invested $1,000 on the time of our suggestion, you’d have $518,784!*
Stock Advisor provides investors with an easy-to-follow blueprint for achievement, including guidance on constructing a portfolio, regular updates from analysts, and two recent stock picks every month. The Stock Advisor service has greater than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 15, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Idiot’s board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Alphabet, Aptiv, Jefferies Financial Group, Nvidia, Oracle, and Uber Technologies. The Motley Idiot has a disclosure policy.
Sell in May and Go Away? Absolutely Not — 2 Stocks Chances are you’ll Want to Buy In its place was originally published by The Motley Idiot