The Quiet Surge of IBM and Oracle: AI Giants Waiting in the Wings

The tech world’s attention has been focused on NVIDIA, Microsoft, Alphabet, and Meta, the usual leaders in artificial intelligence innovation. Meanwhile, two stalwarts have flown under the radar, quietly building momentum through their own AI-fueled growth strategies.

Oracle and IBM are often overlooked by retail investors chasing narrative stocks, but they’re positioned for a potential breakout as the S&P 500 has risen 8% year-to-date. These laggards may be poised to make an asymmetric move heading into the second half of 2026.

Oracle’s performance in 2026 appears lackluster at first glance, but it masks a remarkable turnaround story. The company has finally found its footing, with Q3 FY2026 revenue reaching $17.19 billion and EPS clocking in at $1.79 – a feat not seen in over 15 years. Cloud Infrastructure revenue surged to $4.89 billion, an 84% year-over-year increase, while AI infrastructure revenue grew by 243%.

However, Oracle’s success is tempered by its high capital intensity. With significant capital expenditures and negative free cash flow, investors are waiting for the company’s massive outlays to translate into meaningful cash flow. Analysts remain constructive, with a consensus target of $242.74, but it remains to be seen whether Oracle can sustain this growth trajectory.

IBM presents an even more compelling setup. Shares have tumbled 24% year-to-date and 15% over the past year, despite quietly accelerating fundamentals. Q1 2026 marked IBM’s fourth consecutive EPS beat, with revenue up 9% year-over-year to $15.92 billion. The mainframe business, once seen as a legacy burden, is undergoing a refresh cycle, with IBM Z revenue surging by 51% in Q1.

The implications of Oracle and IBM’s under-the-radar growth are significant. As the tech landscape shifts towards cloud computing and AI-driven innovation, these two companies are uniquely positioned to capitalize on this trend. Their respective backlogs hold immense potential for future revenue growth: $553 billion for Oracle and a growing mainframe business for IBM.

Both companies have made significant strides in developing their AI capabilities. Oracle’s Safra Catz has guided Cloud Infrastructure revenue from $18 billion in FY2026 to $144 billion within five years, with most of that already booked in Remaining Performance Obligations. Meanwhile, IBM’s Clay Magouyrk notes that demand for AI infrastructure continues to outstrip supply.

The tech world would do well to take a closer look at these oft-overlooked giants. As the market waits for NVIDIA and Microsoft to continue their ascendance, Oracle and IBM are quietly building momentum through their own innovative strategies. With the second half of 2026 on the horizon, it’s clear that these two companies have the potential to surprise investors in a big way.

The tech landscape continues to evolve, and those who remain wedded to tried-and-true narratives may find themselves left behind. Oracle and IBM represent a tantalizing opportunity for those willing to look beyond the usual suspects – an opportunity that could yield significant returns for savvy investors.