Oracle (NYSE:ORCL) and Broadcom (NASDAQ:AVGO) are finding some relief Tuesday, with ORCL climbing about 5% while AVGO adds close to 3%. Pull back to 2026, however, and their performances look far less rewarding, since Oracle remains down 28% while Broadcom has gained only 4%.

Each company occupies a valuable position within the buildout of AI infrastructure, although their roles differ substantially. Oracle supplies cloud computing capacity through OCI, where IaaS revenue grew 121% year-over-year during fiscal Q1, whereas Broadcom provides custom accelerators and networking technology used by hyperscalers developing sophisticated computing systems.

Morgan Stanley analysts have weighed in on both stocks, although only one earns a stamp of approval despite the other offering greater upside.

Oracle Stock Could Soar 50% — So Why Is Morgan Stanley Staying on the Sidelines?

Oracle's struggle comes from a growing concern surrounding what investors receive financially from such vast infrastructure spending. Cloud demand continues racing ahead, yet heavy capital requirements and weaker gross margins have made profitability increasingly important when assessing whether today's expansion ultimately creates sufficient returns.

Morgan Stanley analyst Sanjit Singh remains unconvinced that Oracle has crossed that threshold despite acknowledging better execution recently. Singh wrote that the company "delivered a solid quarter against persistently negative intra-quarter sentiment," showing that recent results surpassed a fairly skeptical backdrop without resolving his broader reservations.

Singh's hesitation primarily concerns how efficiently Oracle converts expanding capacity into earnings over coming periods. "We'd like to see more evidence of the progress towards gross margin stabilization," Singh wrote, while also seeking greater clarity surrounding infrastructure availability before adopting a more bullish position.

Oracle nevertheless gave Singh several reasons to keep watching upcoming developments closely. Singh cited encouraging commentary surrounding OCI capacity additions, stronger renewal pricing and anticipated margin stabilization, while describing unchanged annual capital-expenditure guidance of $90 billion to $95 billion as "a positive."

The October 28 financial analyst day could therefore become an important test for Oracle's investment case. Singh considers that event "a good starting point" for determining whether management can provide enough clarity regarding future infrastructure deployment, profitability improvements and application trends.

Meanwhile, Singh stays on the sidelines with an Equal Weight (i.e., Neutral) rating and $210 price target, which still implies about 50% upside from current levels. (To watch Singh's track record, click here)

Broadcom Stock Is Still Compelling Despite Lofty AI Forecasts

Broadcom faces its own hurdle as expectations surrounding AI revenue remain elevated. Its custom accelerator franchise continues expanding alongside networking operations, although lofty projections have made strong execution alone insufficient for generating substantial stock appreciation this year.

Morgan Stanley analyst Joseph Moore, who ranks among the top 1% of Wall Street analysts, thinks that "some expectations for CY27 AI" have moved too high, yet believes market-share assumptions are "too low," creating opposing forces around near-term sentiment.

Moore remains particularly confident about Broadcom's competitive position as additional custom-chip programs enter production. The analyst says that "AVGO can drive 80%+ market share of their SAMs over time," adding that this assessment receives support from industry contacts rather than depending solely upon management projections.

However, that optimism does not mean Moore accepts every bullish forecast surrounding future sales. The analyst pushes back against estimates exceeding $150 billion in AI revenue for next year and discounts longer-range 2028 projections, arguing semiconductor visibility cannot reliably extend so far forward.

His overall verdict on Broadcom remains decidedly favorable despite those reservations surrounding outside expectations. "Valuation remains compelling, growth remains very robust; we like the stock," Moore summed up, assigning AVGO an Overweight (i.e., Buy) rating alongside a $505 price target. Investors are looking at 12-month returns of 41%, should the forecast work out as planned. (To watch Moore's track record, click here)

What Does the Rest of the Street Make of Oracle and Broadcom Stocks?

The rest of Wall Street is enthusiastic about both stocks, awarding each a Strong Buy consensus. Oracle counts 27 Buys, four Holds and one Sell, with the $245.75 average price target pointing to 76% upside over the coming year. Broadcom receives 27 Buys and three Holds, while its $519.21 average target implies about 45% appreciation. (See ORCL stock forecast or AVGO stock forecast)