AI-oriented companies appear to be performing "overwhelmingly" well, Gabelli Portfolio Manager John Felton recently told Schwab Network. Among the companies well-positioned to benefit from the latter trend are Microsoft (MSFT) and Oracle (ORCL), he suggested.

A development team working together to create the next version of Windows.

A "Disconnect" Between the Performance and Stock Prices of AI Names

Although AI-oriented stocks in general and the sector's "high fliers" in particular have dropped sharply, Gabelli's research indicates that the sector's performance is "overwhelmingly positive," Felton said. In fact, "AI's growth is definitely not slowing by any stretch," he stated.

The "disconnect" between the sector's fundamentals and the performance of its stocks can create "an interesting investment opportunity," he believes.

OpenAI's Strong Growth Bodes Well for MSFT, ORCL

OpenAI recently reported that its monthly active user base had jumped to 500 million in March from 400 million in February, said Felton, who called the jump "incredible."

That growth should flow through to the cloud," boding well for MSFT and ORCL, he stated.

Increasing use of AI should also raise the demand for AI computing power and data centers, Felton said.

While we acknowledge the potential of MSFT, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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 an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.