Oracle on Christmas Eve: TikTok cloud win vs. AI capex anxiety
Oracle Corp. (NYSE: ORCL) traded through a shortened Christmas Eve session with two clear forces in play: excitement around a U.S. TikTok venture that cements Oracle's role in sensitive data infrastructure, and growing concern about how the company will finance an aggressive AI data-center buildout tied to OpenAI-scale demand.
Price action and session context
As of Dec. 24, 2025 (14:41 UTC), ORCL traded at $196.73, up $1.36 (+0.70%). The session range was roughly $194.49 to $197.64, with a market cap near $550.9 billion. U.S. markets close early today (1:00 p.m. ET), which typically means lighter liquidity and choppier intraday moves.
TikTok's U.S. venture: why it matters to Oracle
AP reported TikTok signed binding agreements with Oracle, Silver Lake, and MGX to form a U.S. joint venture (TikTok USDS JV LLC) intended to satisfy national-security requirements. The memo cited by AP targets a Jan. 22, 2026 close and outlines an ownership split led by a new investor consortium, with ByteDance retaining a minority stake.
Crucially, U.S. user data would sit in an Oracle-run U.S. cloud with Oracle responsible for data protection and security assurances. AP also noted ORCL rose ~5% in after-hours trading on the headlines. For equity holders, this reinforces Oracle's status as a trusted security-and-infrastructure partner for a massive consumer workload-exactly the kind of visibility investors want in Oracle Cloud Infrastructure (OCI) at this stage. Source
The overhang: AI data-center expansion and funding
Oracle's latest guidance missed expectations while signaling a much larger fiscal 2026 spend. Reuters highlighted capital expenditures running about $15 billion above a prior indication, and management floated structures like customers "bringing their own chips" to ease upfront outlays. Stifel cut its target (to $275 from $350), citing higher spend and near-term earnings pressure.
This landed alongside weaker tone across the "AI trade" after updates from Oracle and Broadcom, pressuring premium valuations. Credit markets are also focused on leverage, with reports pointing to large infrastructure investments, the prospect of more debt, and use of off-balance sheet structures for AI campuses leased to OpenAI. Source
Michigan "Stargate" campus: approvals vs. uncertainty
Reuters reported questions around funding negotiations for Oracle's planned AI campus in Saline Township after an FT story. Oracle said the equity deal timeline remained on track and did not include Blue Owl Capital, and previously indicated construction could begin in early 2026.
In a Dec. 18 corporate post, Oracle detailed the plan: developed with partners including Related Digital and DTE Energy, provisioned for OpenAI, closed-loop non-evaporative cooling, and Oracle paying 100% of electricity and grid-related infrastructure. Contracts were approved by the Michigan Public Service Commission under an existing rate schedule with collateral protections. The company estimated 2,500 union construction jobs and several hundred ongoing roles once live.
What's priced in: targets, factors, and signals
Consensus remains constructive but more sensitive to financing and margins. Aggregators show a "Moderate Buy" and an average 12-month target near $302-$308, with notable dispersion. Morgan Stanley sits at $320 (Equalweight), while Stifel reset to $275 on spend/margin pressure.
Quant takes are mixed: a Nasdaq-hosted Validea screen rated Oracle well on growth factors but flagged debt/equity and earnings persistence. AAII called valuation "ultra expensive" on its framework. Insider sales hit the tape in recent days; these often have benign motives, but in a high-capex story, they get extra attention.
What to track into 2026
- TikTok USDS JV closure (target Jan. 22, 2026) and Oracle's long-term economics as security/cloud operator.
- AI campus financing: cost of equity/debt, use of partner capital, "bring your own chips" structures, and any off-balance sheet vehicles.
- Michigan build: construction start, regulatory/community milestones, and whether timelines hold.
- Capex-to-cash-flow: evidence that today's spend converts to OCI profitability and operating leverage.
How to model it (practical notes for finance teams)
- Segment OCI: separate TikTok-scale workloads (security-weighted, storage/network heavy) from GPU-intensive AI clusters tied to OpenAI and similar customers.
- Track unit economics: GPU hour pricing, utilization ramps, support/energy costs, and depreciation lives by cohort. Watch for shifts in revenue mix toward managed services that lift gross margin.
- Financing mix sensitivity: test scenarios for higher funding costs, equity partner dilution in JV/SPV structures, and customer prepay/commitment levels.
- Balance-sheet guardrails: monitor net leverage, interest coverage, free cash flow after capex, and timing of major maturities.
- Milestone triggers: TikTok close, Michigan ground-breaking, signed capacity with prepayments, and disclosed "bring your own chips" deals.
Working thesis check
Bull case: Oracle converts headline demand (TikTok + OpenAI) into durable, high-margin cloud revenue while shifting capital intensity to partners and customers. Execution plus creative financing sustains growth without eroding credit quality or equity value.
Bear case: rising spend, slower ramps, or costly funding compress margins and multiples before AI revenue scales. Delays at flagship campuses keep cash returns pushed out, keeping the stock tethered to capex concerns.
Bottom line for 2026: Watch the financing playbook as closely as the bookings tape. If Oracle proves it can scale AI capacity without overburdening its balance sheet, the multiple has room. If not, expect valuation to key off capex and credit metrics more than backlog headlines.
This article is for informational purposes only and is not investment advice. Markets move, forecasts change, and you should do your own research before making decisions.
Your membership also unlocks:
