Jim Cramer suggests that Oracle bought on weakness and sold C3.ai on strength

CNBC’s Jim Cramer compared on Tuesday oracle And C3.aiEnterprise software companies in the spotlight as Wall Street continues to flock to artificial intelligence-focused stocks. He recommended buying Oracle on weakness and selling C3.ai on strength.

“After this decline, I would be a buyer of Oracle because the key parts of the company are still doing well,” he said. “As for C3.ai, if you own it, guess what? I would take something off the table. But for heaven’s sake don’t try to short circuit the damn thing, it has AI in its name – that’s spelling disaster in this market.”

Both companies reported earnings on Monday evening. Oracle continued to have its worst day of the year, with shares falling 6.67%. until the close of trading on Tuesday, as the quarter was not convincing. C3.ai shares soared throughout the day as the company beat expectations – dipping a bit towards the end but still managing to end up 0.12%. Cramer attributed Oracle’s miss in the “headlines” to one-time issues, adding that guidance for the current quarter might have been stronger had it not been for a loss on a non-core investment. The key business areas – namely cloud infrastructure and AI – are doing well, and management has indicated that demand continues to exceed supply, Cramer said. He also noted that Oracle has a number of high-profile customers including Open AI, xAI, Cohere, Nvidia And Meta.

But Cramer pointed out that there are a large number of companies that are on the rise simply because they are involved in AI, and C3.ai could be one of them. He said sales growth isn’t as fast and the company is still losing money. Although some investors were impressed by C3.ai’s partnership MicrosoftCramer wondered whether the move would actually ultimately hurt profitability. While the initiative could increase sales, C3.ai will make large investments to support it, he said.

For Cramer, withdrawing from Oracle could be a unique opportunity to join a solid company. This quarter’s narrow miss was the result of inflated expectations, he said, emphasizing that the company’s AI business is promising.

“It’s a fantastic company, a red-hot stock that finally gives you a better entry point,” he said. “After today’s drop… I don’t know how much cheaper it will be.”

“I have known Jim for decades and have the greatest personal admiration and professional respect. His advice not to sell C3.ai appears to be well-founded as many who have shorted the stock in recent years will be financially ruined,” C3.ai CEO Tom Siebel told CNBC. “In terms of growth, C3.ai is one of the fastest-growing companies in the public software company universe, with revenue growth of 29% in the most recent quarter.”

Oracle did not immediately respond to a request for comment.

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia and Meta.