Avoid Oracle Due to Fading Competitive Moat

3 months ago

Rob Spivey

"The third company is the opposite. This is a company that we think that everybody should avoid. And it's because of the other really powerful thing that happens when you talk about competitive advantages. It's companies that change their competitive advantage. For Oracle, when they get somebody locked on to PeopleSoft they collect revenue year in and year out. They decided, 'You know what, that business isn't good enough for us. Instead we're going to go build data centers for OpenAI.' And because of that, we have seen Oracle's return on assets steadily fade over the last few years. I would not be an owner of Oracle for the next two to three years."

Rob Spivey warns investors to avoid Oracle, arguing that by shifting focus from its traditional ERP model to building data centers for OpenAI, Oracle has compromised its durable competitive moat and experienced a steady decline in return on assets. He advises staying away from Oracle for the next 2-3 years.

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