We recently published a list of 10 Cheap Blue Chip Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Oracle Corporation (NYSE:ORCL) stands against other cheap blue chip stocks to buy according to hedge funds.
The broad-based market anxiety increased as the US policy uncertainty rose, says Fidelity. The financial markets were weighed down by tariff hikes, deregulation, and tighter immigration policies. The global business cycle is now less synchronized. As per the investment management firm, the US seemed to show mid- and late-cycle dynamics in Q1 2025. Furthermore, the diversification across fixed income and non-US assets is of utmost importance amid growth risks. While the gold and commodities gained, the US dollar decline fueled the non-US equities, says Fidelity.
Amidst US Policy Uncertainty, Diversification Remains Critical
As per Fidelity, the uncertainty regarding the direction of US policy impacted the financial markets during Q1, with investors digesting the news related to executive actions, such as tariff increases, deregulation announcements, reduced government staffing and programs, and tougher immigration activities. Also, the worries related to the economic effects of the tariff increases on the global economy saw an increase during the days after the quarter closed. Despite elevated growth risks, the global expansion was intact as of the close of Q1. Fidelity opines that diversification in fixed income assets and non-US assets is essential.
As per the investment manager, the S&P 500 Index delivered a return of −4.3% for Q1 2025, partly because of the performance of growth stocks (−10%). On the other hand, gold (+19%) and commodities (+8.9%) saw robust gains amid higher market uncertainty.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Investors’ Approach Amidst Fluctuating Economic Indicators
According to Fidelity, the consumer inflation remained rangebound at ~3% during Q1, which was well above the 2% target of the US Fed. The firm anticipates sticky inflation around 3% for the next year, with upside risk resulting from tariff increases. As per the firm, the consumer inflation expectations have increased to multi-decade highs, making it simpler for businesses to pass the increased costs. Coming to the labor, it has remained tight so far, despite increased policy uncertainty, government layoffs, and federal funding cuts, says Fidelity. On the supply side, the broader labor force participation has stalled below the pre-pandemic rate due to slowing immigration as well as demographic constraints.
As per Marci McGregor, Head of Portfolio Strategy (Chief Investment Office), Merrill and Bank of America Private Bank, the next few months can be a good time to play defense. The investors can consider defensive, dividend-paying, and value-oriented stocks. For the long term, the investors can position themselves for when the uncertainty around trade decreases. The volatility can provide a chance to buy assets supporting the long-term strategy at attractive prices, says McGregor.
Our Methodology
To list the 10 Cheap Blue Chip Stocks to Buy According to Hedge Funds, we scanned the holdings of the iShares Core S&P 500 ETF and chose companies that trade at a forward P/E of less than ~20.0x. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 105
Forward P/E as of April 18: ~17.7x
Oracle Corporation (NYSE:ORCL) provides products and services addressing enterprise information technology environments. Morningstar expects annual revenue growth to consistently reach the low teens between fiscal 2026 and 2030, with the adoption of OCI and Oracle Cloud Applications increasing. Furthermore, cloud services and license support are expected to become critical growth drivers for Oracle Corporation (NYSE:ORCL). The firm also expects that the services segment can fare better with low-single-digit revenue growth, with customers relying on Oracle for data infrastructure consulting services.
Morningstar believes that its wide moat is being supported by increased switching costs. Database systems and other enterprise software that Oracle Corporation (NYSE:ORCL) sells remain important for the day-to-day operation of modern enterprises. Furthermore, companies tend to stay with the same vendor for years on the application side and even decades for core systems in a bid to ensure optimal business continuity, opines Morningstar. This is expected to keep Oracle Corporation (NYSE:ORCL)’s return on invested capital above its cost of capital over the upcoming 20 years, given that it is a critical player in such areas.
Artisan Partners, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Notable adds in the quarter included GE Vernova and Oracle Corporation (NYSE:ORCL). We believe Oracle is entering an interesting profit cycle as its faster growing business units become a larger percentage of the revenue mix. Most notably, Oracle Cloud Infrastructure (OCI) has undergone a significant product upgrade cycle that will enable it to be the primary incremental top-line growth driver. The company is winning new accounts due to its attractive pricing, flexibility and expanding geographic availability. Also, within its SaaS segment, we believe the company will benefit from the secular trend toward cloud computing. Oracle experiences a significant profit boost as it moves its lower margin on-premise database business to the cloud (through any cloud provider), which operates at higher margins. The company recently surprised investors by announcing a 2029 revenue target of $104 billion, which implies an acceleration in annual revenue growth to ~16% from the current ~9%–10%levels. Shares pulled back in the quarter, and we used it as a buying opportunity.”
Overall, ORCL ranks 3rd on our list of cheap blue chip stocks to buy according to hedge funds. While we acknowledge the potential of ORCL as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than ORCL but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
