The entire stock market seems to be centered around the technology sector today, going after the ever-increasing valuations and growth projections seen in the artificial intelligence space and its support areas, such as semiconductors and chip makers. However, there is another area that hasn’t gotten too much attention lately.
This is where today’s opportunity comes from, but only for investors willing to look outside of the shiny box of artificial intelligence. Through what could be called “Vertical” plays, some could say that it won’t be stocks that “make” artificial intelligence, but rather those that use it to keep scaling their business in ever more efficient ways that will soar.
That is why names like Oracle Co. (NYSE: ORCL), Uber Technologies Inc. (NYSE: UBER), and even Paycom Software Inc. (NYSE: PAYC) are worth watching outside of this race for the best and fastest artificial intelligence models. With fundamental tailwinds on their backs, these stocks have earned Wall Street’s attention recently. The question is whether investors should follow.
Behind the Recent Boosts at Oracle Stock
[content-module:Forecast|NYSE: ORCL]Despite Oracle's shares already trading at 90% of their 52-week highs, there are a lot more reasons to think that the ceiling could be much higher than that. As a matter of fact, some Wall Street analysts were comfortable enough to boost this company’s valuation recently, calling for an additional double-digit rally.
Such as those from Cantor Fitzgerald, which recently decided to initiate its coverage on Oracle stock at an Overweight rating, placing a valuation of up to $214 per share on it as well. This view calls for a new 52-week high in the stock but also a net upside of as much as 22% from where it trades today.
With this much upside, investors could assume that Wall Street is already aware of how vital Oracle’s cloud business model is to providing the infrastructure under which these artificial intelligence models are trained and developed.
It’s as if all other companies had tons of land but no tools to develop it and build upon it, which is where Oracle's importance and upside potential come into play.
Uber Will Be a Top Pick
[content-module:Forecast|NYSE: UBER]After delivering a year-to-date performance of up to 35% already, Uber shares seem to have more than just the fact that artificial intelligence is behind them to help the business run. They also seem to have the business itself as just the sort of model that markets might be after in the coming quarters.
Investors like Warren Buffett have already started selling out some of the growth names in the market, as the relative performance to value stocks has gotten to the widest level in the current cycle. What this means for investors is potential S&P 500 volatility and rotations to companies with stronger free cash flow.
Uber will be able to handle this, as its low-cost business model allows it to retain enough capital from each service delivered to reinvest back into further growth. Investors can see this in the company’s financials, as Uber delivered a gross profit margin of up to 33.2% over the past 12 months.
On a free cash flow basis (operating cash flow minus capital expenditures), Uber’s latest quarterly presentation shows a net $1.7 billion in free cash flow, more than double the same quarter last year. Strong and sustained free cash flow allows for stability in the stock price, especially as Uber is synonymous with ridesharing, speaking to its market share.
Its exposure to artificial intelligence for its networks and matching system seemed to have gotten Wall Street analysts excited as well, particularly those from Evercore. They’ve reiterated an Outperform rating as of February 2025, this time placing a valuation of up to $115 per share on Uber to call for as much as 41.2% upside from today’s price.
Institutions Picked Paycom Stock This Quarter
[content-module:Forecast|NYSE: PAYC]Considering that this company is now implementing more artificial intelligence into its services and systems, it seems that a few institutional buyers found that to be enough reason to boost their holdings in its last quarter, especially those from Sylebra Capital.
As of February 2025, these buyers boosted their holdings in Paycom stock by as much as 63.8%, bringing their net position to a high of $659 million today, or 5.6% ownership in the company. Maybe it’s the institutional buying or the fact that Paycom stock trades at 88% of its 52-week high, but bears have stepped off the gas.
Over the past quarter, Paycom’s short interest declined by as much as 5.3%, a sign of bearish capitulation. This gives bullish traders and investors another window of opportunity to consider in the coming months. Ultimately, buyers will want to look into the company’s financials.
With a gross profit margin of over 80%, Paycom retains enough capital to be invested and managed wisely by management. This is why it has generated a return on invested capital (ROIC) rate of 29.4% over the past 12 months, making it a clear target for investors looking to compound their capital securely.
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