Oracle Shares Surge on TikTok Partnership News

Oracle's stock is rallying in pre-market trading, gaining over 2% following the disclosure of a finalized joint venture structure for TikTok's U.S. operations. This development marks a significant rebound for the technology giant after a week dominated by concerns over its financing strategy.

Despite recent share price volatility, institutional analysts maintain a constructive view. Wells Fargo has reaffirmed its "Overweight" rating, setting a price target of $280. From the current level around $193, this implies an upside potential of approximately 46 percent.

Analyst Michael Turrin suggests the market has already priced in negative scenarios while underestimating the scale of the company's artificial intelligence pipeline. He highlights a particularly striking projection: OpenAI alone could account for 25 to 30 percent of Oracle's earnings between 2028 and 2030.

TikTok Joint Venture Secures Critical Role

The immediate catalyst for the pre-market advance is the formation of a new U.S. entity for TikTok. To address national security requirements, ByteDance has agreed to a joint-venture structure, positioning Oracle at the center of the platform's American operations.

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A consortium led by Oracle, alongside Silver Lake and Abu Dhabi's MGX investment fund, is set to hold a majority stake in the new "TikTok US" unit. This agreement solidifies Oracle's role as a critical infrastructure partner in geopolitically sensitive technology sectors and comes with a broad mandate:

• Data Sovereignty: Complete responsibility for data protection and storage for the U.S. market.
• Security Oversight: Management of algorithm security and content moderation.
• Revenue Impact: RBC Capital notes the high-margin opportunity for Oracle Cloud Infrastructure (OCI) services.

Financing Concerns Linger as a Counterweight

While the TikTok news is positive, questions regarding capital allocation persist. Last week, Oracle's stock fell 4.5 percent after a planned $10 billion financing deal with Blue Owl Capital stalled. Those funds were intended for a new one-gigawatt data center project in Michigan.

The swift pre-market recovery indicates investors view the TikTok-related revenue stream as a stabilizing factor. However, volatility remains elevated, with the stock recording 26 moves exceeding 5 percent in the past year alone.

Execution is Key in a Pivotal Phase

Supported by the TikTok deal and its OpenAI partnership, Oracle is entering a crucial period. The stock's support level near $190 is holding, and the pre-market gains hint at a potential technical reversal. The company's primary challenge will be securing financing for its ambitious data center expansion without straining its balance sheet.