Oracle (ORCL) Stock Rallies as TikTok and OpenAI Deals Gain Traction

TLDR

• Oracle shares jumped 9.6% Monday following D.A. Davidson’s upgrade to Buy rating with $180 price target.
• Analyst Gil Luria cited OpenAI’s $40 billion cash reserves and potential $100 billion fundraise as key catalysts.
• TikTok USA partnership generated approximately $800 million in revenue for Oracle last year.
• Stock remains 55% below September peak of $328.33 despite Monday’s rally to $155.95.
• Oracle faces $130 billion debt and $248 billion in operating-lease commitments going forward.

Oracle stock delivered its strongest performance in months on Monday. Shares rose 9.6% to close at $155.95.

Oracle Corporation, ORCL

D.A. Davidson analyst Gil Luria upgraded the stock to Buy from Neutral. He kept his price target at $180.

The upgrade focused on OpenAI’s financial health. Luria believes the AI company now has the resources to fulfill its obligations to Oracle.

OpenAI currently holds about $40 billion in cash. The company may raise an additional $100 billion by the end of the quarter, according to D.A. Davidson.

These funds will help pay for the massive data center buildout Oracle is constructing for OpenAI. The market had been valuing this relationship negatively.

Recovery From September Highs

Oracle peaked at $328.33 per share in September. The stock has fallen 55% since that record high.

The September surge followed an announcement of over $300 billion in new contract obligations. Investor enthusiasm cooled when details emerged.

A single contract with unprofitable OpenAI accounted for most of that backlog. Concerns grew about whether OpenAI could pay for the services.

Luria’s analysis suggests those worries may be overblown. He expects OpenAI to reclaim its position as a top challenger to Google.

TikTok Partnership Adds Growth Vector

The TikTok USA deal provides Oracle with another revenue stream. Oracle owns a 15% stake in the restructured entity.

Last year TikTok USA brought in roughly $800 million for Oracle. The arrangement locks in TikTok USA as a long-term cloud customer.

Oracle also gained exposure to ByteDance for potential future partnerships. The company secured this stake at an attractive price point.

Vice President JD Vance valued TikTok USA at $14 billion. That figure came in well below market expectations.

Oracle still carries heavy financial obligations. The company has $130 billion in debt on its books.

However, the analyst believes Oracle has the right partnerships to manage these challenges. The OpenAI and TikTok relationships provide paths to growth.

Oracle is scheduled to report earnings on March 9. Investors will get updated guidance on both partnerships during that call.

The stock upgrade comes as Oracle works to monetize its AI infrastructure investments. Monday’s rally suggests some investors are becoming more optimistic about those prospects.

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