Oracle (ORCL) stock saw focus once again after reports surfaced the company would play the key role for the United States restructuring of TikTok. Oracle would rebuild and retrain a domestic-only iteration of TikTok’s algorithm away from ByteDance, the Chinese parent company, according to a White House official. The deal also places Oracle as the party responsible for TikTok’s United States user data through a cloud framework.
Though the shares of Oracle slipped by over 5% for the current session, the shares remain up by nearly 5% for the past half a week. The correction provides a buying opportunity as the investors absorb the likely impact of this new deal. The news follows a few weeks after Oracle released strong fiscal Q1 results, including strong growth for the cloud as well as a multiyear order backlog, which may fundamentally re-rate the company’s earnings potential.
Against the backdrop of regulatory tailwinds, soaring demand for safe-haven U.S.-based cloud infrastructure, and robust earnings expectations, Oracle could finally begin a new path of gains—thanks, possibly, to the deal for TikTok this week becoming a reality.
Oracle is a global leader in enterprise software and cloud infrastructure services, headquartered in Austin, Texas. With a market capitalization of over $930 billion, the company operates across software-as-a-service (SaaS), platform-as-a-service (PaaS), and infrastructure-as-a-service (IaaS) segments. It serves thousands of customers globally, including many Fortune 500 companies.
In the last 52-week span, the share price of ORCL advanced from a trough of $118.86 to a peak of $345.72. Currently, the share stands at $310.70, up by over 60% this year so far—far outpacing the S&P 500 Index’s ($SPX) less impressive 15% rise. The latest softness could be a sign of profit-taking, but the broader trend is still intact as the sentiment among investors remains strong.
Valuation-wise, the company is trading at a forward price-earnings (P/E) multiple of 57.6x, which is reasonable relative to high-growth…
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