When it comes to cloud stocks, Oracle (NYSE: ORCL) and Amazon (NASDAQ: AMZN) are among the industry's leaders.

Oracle's surging backlog initially lifted its stock, but the scope of its relationship with OpenAI cast doubt on the security of much of that future expected business. In contrast, Amazon pioneered and continues to lead the cloud industry, though it faces increasing competition from companies building AI-specific cloud environments.

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Fortunately, AI is likely here to stay, and Grand View Research forecasts a compound annual growth rate of 40.8% for the generative AI market through 2033. Also, both companies appear well-positioned to benefit from that growth over time.

However, one of these cloud stocks will likely benefit significantly more than the other over the next five years.

Oracle's current situation

Oracle came to the cloud infrastructure race at a relatively late date. Investors previously knew it best for its relational database technology. As that industry changed, Oracle shifted its focus to the cloud to reinvigorate growth, standing out by offering database-native AI supported by ultra-fast GPU networking. That has helped it offer high-performance compute and cloud networking at a lower cost than competitors such as Amazon Web Services (AWS).

This strategy culminated in a $300 billion partnership with OpenAI that it inked last fall. That deal dramatically increased its backlog, and the backlog has continued growing. After rising $85 billion in the most recent quarter, it now stands at $638 billion.

Nonetheless, OpenAI's multibillion-dollar losses and rising competition in the AI space have led industry analysts to question whether OpenAI will be able to fulfill its end of the deal. Additionally, Oracle has had to borrow heavily to add to its infrastructure so that it can monetize its backlog. That took its total debt level to $129.5 billion, up from $92.6 billion one year ago as it funded $55.7 billion in capital expenditures. Also, its free cash flow for its fiscal 2026 (which ended May 31) was negative $23.7 billion, a far greater outflow than its negative $394 million in free cash flow during its fiscal 2025.

Concerns about those figures may partially explain why the stock has fallen by 56% from its peak. That drop has brought its P/E ratio down to 25, which may entice some investors to buy. However, the stock is unlikely to recover until the company can reassure investors that its massive investments will pay off in the end.