Oracle’s Strategic Pivot: TikTok Deal Fuels Cloud Ambitions

Oracle's shares have found renewed vigor following the confirmed details of its involvement in TikTok's US operations. The formation of a dedicated joint venture acts as a powerful catalyst, temporarily overshadowing recent investor concerns regarding the financing of major infrastructure projects. Market observers suggest the strategic nature of Oracle's role within the deal's architecture is more significant than the specific size of its equity stake.

The backdrop for this reassessment is Oracle's accelerating cloud business. Financial results for the second fiscal quarter of 2026 underscore the company's successful transition toward cloud services.

• Cloud Revenue: Reached approximately $8 billion, representing year-over-year growth exceeding 30%.
• Infrastructure Driving Growth: The rapid expansion of Oracle Cloud Infrastructure (OCI) remains the primary engine. The TikTok arrangement is expected to deliver substantial, predictable utilization, further aiding the platform's scaling efforts.

This robust growth provides a fundamental context in which the TikTok partnership is viewed not as an isolated event, but as a strategic component of a broader cloud narrative.

Anatomy of the TikTok Joint Venture

The catalyst for the positive sentiment is the now-defined structure for TikTok's US business. Rather than a full acquisition, a new entity named "TikTok USDS Joint Venture LLC" has been established, with Oracle taking a direct stake.

Key elements of the joint venture include:

• Equity Stake: Oracle will hold a 15% share in the new company. Investment firms Silver Lake and MGX are also slated to hold 15% each, while ByteDance retains a minority interest.
• Official Role: Oracle has been formally designated the "Trusted Security Partner"—a title that emphasizes a security-focused mandate beyond that of a generic technology or cloud provider.
• Operational Duties: All US user data for TikTok is to be hosted on Oracle Cloud Infrastructure (OCI). Furthermore, Oracle will conduct ongoing audits of the platform's recommendation algorithms to prevent foreign influence deemed undesirable from a US national security perspective.

Investors interpret this specialized security role as an endorsement of Oracle's "Sovereign Cloud" capabilities. The expectation is that such a critically sensitive contract is not only likely to be high-margin but could also pave the way for additional government or regulation-heavy cloud projects.

Should investors sell immediately? Or is it worth buying Oracle?

Moving Past a Financing Setback

The positive momentum has also helped the stock distance itself from negative headlines earlier in the week. On Wednesday, December 17, shares faced pressure after Blue Owl Capital withdrew from negotiations to provide significant infrastructure financing.

The financing was intended for a planned $10 billion data center project in Saline Township, Michigan. Blue Owl cited unattractive lease terms and concerns over potential regulatory delays as reasons for its exit, which initially removed a key piece of funding.

Market focus has since shifted decisively toward the TikTok contract. The recent stabilization in Oracle's share price suggests many investors view the Blue Owl development as a temporary hurdle in capital expenditure planning rather than a structural flaw in the business model. Oracle has indicated it is seeking alternative equity partners, with media reports mentioning Blackstone as a potential candidate to fill the financing gap.

Market Perspective and Valuation

From a technical standpoint, the stock has recovered from its Blue Owl-related weakness. While trading at around €164, notably below its 52-week high of over €281, it remains well above the low of approximately €111. The shares currently trade about 14% below their 50-day moving average, indicating that despite the recent recovery, a significant discount to the short-term mean persists.

The dominant narrative among market participants has clearly evolved: attention has moved away from financing risks for individual mega-projects and toward the visibility of new, long-term revenue streams from the TikTok agreement. The confirmation of a January 2026 closing target provides a concrete timeline for when the additional cloud infrastructure load should begin impacting financial results. Concurrently, the "Trusted Security Partner" status furnishes Oracle with a competitive differentiator against hyperscalers like AWS and Microsoft Azure, particularly for security and compliance-sensitive cloud contracts.