Beaten-Down Tech Giants Emerge as Long-Term Opportunities

The AI industry has experienced significant fluctuations in 2026, with some stocks soaring and others being beaten down. Despite this volatility, two companies stand out as potential long-term investments: Oracle (NYSE:ORCL) and IBM (NYSE:IBM).

Oracle's contracted backlog reached an all-time high of $638 billion in the most recent quarter, thanks to a massive deal with OpenAI. However, investors are skeptical about customers' ability to fulfill their commitments, including OpenAI's commitment to spending $750 billion on computing power and infrastructure through 2030.

Oracle is also ramping up its capital spending to increase capacity, which has led to an increase in debt and dilution. Despite this, the company's capex is expected to be worth the cost if revenue expectations are met.

IBM suffered a significant decline after pre-announcing a second-quarter earnings miss, but its software and consulting businesses have continued to grow year-over-year. The company's AI book of business is also growing rapidly, and it recently achieved an important milestone in quantum computing.